Port Angeles homes are selling even with the market down from last year, but something interesting is happening. Actually, two things.
First, even though the inventory is higher, the buyers here are cherry picking the best homes. That means the competition is keener than you might think for the top 10% of the homes on the market, the kind that most people really want. These homes are selling and gone from the inventory.
Second, the price of some homes is very negotiable, and the price of other homes is not very negotiable. This second point requires an explanation. In almost 30 years in the real estate business, I’ve never seen such elasticity in the listing prices and selling prices of homes. An example will probably help explain what I mean.
One house is for sale for $284,500, already down substantially from the original listing price over a year earlier. A buyer makes an offer of $260,000, which is $24,500 less than the listed price. While that might not sound like a huge discounted offer at 8.6% below the current listed price, when you take into consideration that the original listed price was much higher, this is a pretty serious hit for a seller to take in this market.
The offer was accepted at $260,000, and the buyer proceeded with his due diligence, which included the home inspection, the community septic inspection, and the well inspection. During the home inspection it was discovered that the back concrete patio was settling, most likely because the subsurface had not been properly compacted. The concrete was cracking in several places, and the settling was resulting in water draining toward the crawl space under the house at one corner. The pest inspection showed some indication of moisture ants under the house at that location.
After further volleys, the seller agreed to further reduce the price by $9,000 because of the concrete patio problems, so the final price at closing was $251,000. (There is so much more to negotiating than most people realize, and a lot of effective tricks in the trade for the experienced professional.)
This 2005 home is a custom built, 1900 square foot home with a large double car garage. It is a very nice custom home and definitely above the average stick-built home. The home was a steal at $251,000. This buyer won the lottery, even considering the present state of the market. I know all this because I represented the buyer as the buyer’s agent. The photo above is the home. It was owned by a relocation company, which bought it from their employee who was transferred across the country. The price of this home was negotiable.
The price of other homes may not be so negotiable. Not all sellers are either desperate to sell or need to. Many sellers would like to sell, but they can hang onto their home for a year or more if they don’t sell it. These homes, and there are many, are not so negotiable on price or terms.
So we have a real estate market that is essentially bifurcated. There is a segment of the market that is normal with supply and demand playing out, but with normal buyers and with sellers that are not desperate or under financial pressure to sell. Then there is another segment of the market that is full of foreclosures, distressed properties, and sellers who must sell sooner rather than later. The chaos that results in the market creates a segmented market where one house is dramatically effected by the economic forces to drive the price lower, but the house across the street may not be effected at all by the same variables.
If you are qualified to buy, and that is your intention, don’t ignore the first factor I mentioned. Buyers are cherry picking the best homes right now, so the home you would consider ideal may be sold before you make a decision.
Last Updated on April 4, 2009 by Chuck Marunde