Yesterday, The Learning Channel (TLC) premiered a new series, “Please Buy My House.” SouthCoastToday.com explains:
“‘Please Buy My House’ (8 p.m. Saturday, TLC) marks a departure from the cable real-estate fantasy shows in which owners sell their domiciles without effort and investors depart for champagne wishes and caviar dreams by ‘flipping’ real estate for a living.”
“The housing market is in a funk, and ‘Please Buy My House’ recognizes that fact. The show documents families trying new approaches to sell homes that have been on the market for too long, draining their resources and causing endless worry.”
Yesterday, the show featured the Bental family as they struggled to sell their home in Plantation, Florida. Two years ago, Dan and Andrea Bental moved with their four kids from Plantation to Little River, South Carolina so Dan could take a “better” job. When they moved, the Bentals purchased a new home in South Carolina before they sold their Plantation home.
Andrea explained why they purchased a new home prior to selling their old one, “We felt very comfortable buying a house in South Carolina because of what was going on in South Florida. It was a no-brainer.”
In April 2005, the Bentals listed their four-bedroom, two-bath ranch home in Plantation for $875,000. After two years on the market and a price drop down to $749,000, the house was still unsold. The TLC show, which was filmed in April 2007, highlighted the Bentals latest effort to sell the house.
The show focused on the hardships faced by the Bentals as they tried to pay two mortgages. Since they were unable to afford the two mortgage, the Bentals refinanced the Planation home, pulling out $100,000. They also took a loan against a 401k for $50,000. By the end of the show, the Bentals mentioned they may be forced to use their kid’s college savings to prevent going into foreclosure.
The show was clearly empathetic towards the Bentals’ plight. Knowing the difficult market here in South Florida, I felt sorry for the Bentals as I watched the show. Not only were they wiping out their own savings, their mistake was placing their children’s future education in jeopardy. However, researching the Bentals’ situation and filling in information omitted from the show, my feelings of empathy completely disappeared.
After watching the show, I immediately looked up the Bentals’ home on the MLS. Since the show, they have dropped the price of their home another $100,000, down to $649,000. However, even at that price, they are completely unrealistic. The Bentals are selling a 4/2, older-construction (1977) 3,100 square-foot ranch-style home on a very large lot (3/4 acre). Consider what some of the Bentals’ competition at that price range:
- A 5/3, 4,400 square-foot home in Coral Spring’s Eagle Point, which is a much nicer community than Plantation Acres with MUCH better schools in my opinion. Build in 1988. It is on the MLS for $629,900
- A 5/4, 3,403 square-foot home in Weston. Again I think this is a better neighborhood with much better schools. This home was built only five years ago. This is one the MLS for $649,900
- A 6/4.5 3,943 square-foot home in Coral Springs. Built in 1999, this home is on the MLS for $649,900.
I could add dozens of similar homes that are newer, bigger, nicer, and in better neighborhoods. If I were buying right now in that $650,000 price range, I would never consider the Bentals’ home – and it is not even close.
Keep in mind, the Bentals originally listed their house two-and-half years ago for an absolutely ridiculous $875,000. Even with a $226,000 price reductions, the home remains painfully overpriced.
My feeling of empathy eroded further when I looked at the Bentals history with this home. The Broward County Property Appraiser’s website shows that the Bentals purchased the home in 2003 for $405,000. The originally financed the home for $364,500 and as explained in the show, pulled out another $100,000. They currently owe $518,000 on the home that is financed through an interest-only (currently 6.25%) ARM.
The Bentals could drop their price down to $551,000 and could still walk away after paying the Realtor®’s commission and paying off their outstanding mortgage. Instead, the Bentals remain steadfast, paying nearly $5,000 every month to maintain an empty house. At the end of the show, Dan explained that he was going to hold out until the real estate market turned around.
The reason this show piqued my interest is because it perfectly illustrates the mindset that I think is pervasive among South Florida sellers. Here’s some of what I think is driving Bentals and others who seem completely displaced from realty:
- Sellers do not seem to realize that price is by far the biggest factor that produces sales. In the TLC show, the Bentals went through great efforts to promote their open house. However, after all the effort, they had no serious inquiries. Why? Their price was ridiculous. Open houses, advertising, signs, hiring the “right” Realtor®, free giveaways, and sales gimmicks are all completely useless if the home is not priced correctly. A well-priced home will get traffic even in our current market.
- Sellers seem to follow sales rather than listing prices. I imagine if you look at sales in the Plantation Acres neighborhood during the past two years, you will find a few 4/2 homes that sold for over $600,000. This is probably driving the Bentals’ pricing strategy. In my opinion, Realtors® are mostly to blame for this mindset as they constantly quote “comps” as an indicator of the current market. However, past sales are absolutely irrelevant, especially in today's slow-moving, high-inventory market. The only compariable prices that are relevant is the current listing prices of the other homes for sale in local mareket. Potential buyers do not care what sold last year; they only care about current, comparable listings.
- Sellers tend to look only at the competition in their own small, local neighborhoods, which is not extremely relevant. Modern buyers, with access to easy-to-use Internet search engines, typically look at a large areas. For instance, most potential buyers that would consider the Bentals’ home will evaluate all of West Broward, not just Plantation Acres. In this case, there are loads of homes in Davie, Cooper City, Weston, and Coral Springs that are much better values. This is one of the reasons we see entire neighborhoods that are over-priced and have little or no sales activity.
- Sellers seem to ignore holding costs. In this case, the Bentals are paying $5,000 a month to maintain their home. In the two-and-a-half years that the Bentals have been trying to sell their home, they have spent approximately $150,000 in carrying costs. Discounting early could have saved them all those costs.
- Sellers seem to think, “Prosperity is just around the corner.” At the end of the show, Dan Bental explained that the market would change within the next two to three years. The couple seemed to be holding out for real estate’s rebound. This attitude is surprisingly common even though every piece of data shows that the market will continue in its freefall. The theory that the real estate recovery is imminent may be the most destructive of all these sellers’ attitudes.
While this is my list, there are certainly other pervasive attitudes among South Florida sellers. Please share any that you may have seen.
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25 comments:
Are they going to air this show again? I'd want to see it.
My favorite attitute is when sellers sell the house for "what they have in it." Many seller think that their purchase price or the cost of their improvements are relevant to their selling price.
As a buyer, I could care less how much money you have in it or how much money you need to clear to pay off your HELOC. It's simply not relevant to me.
I see that attitude on those flipper shows all the time.
Their behavior is pretty typical. Individuals are risk averse and do not want to monetize a perceived loss. This why people road NASDAQ from 5000 to 1400 in 2000 when the dotcom bust hit. Many individuals are also financially illiterate, which is why the seller can't see the holding costs, nor the opportunity cost of not having the equity in the plantation home invested in the capital markets. A pretty sad story. And all self-inflicted.
You make a good point, Drunken Duck.
Had the couple simply been realistic in 2005 and listed the home for $700,000, they would have sold it within a month.
The could have pocket $200k at that time and avoided $150k in holding cost.
What's missing in this equation is opportunity costs. Since April 2005, the S&P 500 is up 40.7%. This means that had they done the right thing and invested the $200k in an index fund, they'd have $281k right now.
Instead they're down $150k right now and still paying on the home.
We should never forget the opportunity cost of having assets tied up in depreciating real estate.
Rebroadcast Saturday 10/13 at 3:00 p.m. on TLC. (Channel 280 on DirecTV.)
anon,
And in doing the comparison with the S&P, one must remember that investors are not rewarded for holding idiosyncratic risk. So a risk-adjusted comparison probably makes the homeowner look worse.
Another interesting house...
12572 SW 73 TE, Miami, FL 33183
Bank Owned
Bought on 8/2005 for $705,000
Currently listed at $699,000
Listing History:
- Price Reduced: 07/27/07 -- $799,000 to $774,900
- Price Reduced: 08/11/07 -- $774,900 to $749,000
- Price Reduced: 09/20/07 -- $749,000 to $699,000
Its below the 2005 sale price and at $220/sqft. This should really annoy the owner who bought at 12617 SW 73 TERR MIAMI FL (across the street), who paid $840k and is looking at a sizeable equity loss. And they guy down the street at 7230 SW 126 CT MIAMI FL must also be a bit disturbed that he paid $900k (246 a sqft).
Wow, pretty harsh opinions. I was the individual featured on the show, and boy you are so far off base. Greed has never been the driving force behind this.
True the home was originally listed at 875,000, but not at my suggestion. I lowered it immediately against my realtors advice. The 1st deal fell through 1 week prior to closing. That deal was for $50,000.00 below appraisal. This was in June of 2005.
True home was purchased for $405,000 in 2003 and had undergone a complete updating including a new roof within the first year.
During 1st listing two contracts never made it to the closing table.
After the hurricane came through, I felt as though the home needed to be off of the market due to the fact that the whole area was recovering. Even though both my husband and myself are licened realtors, we chose to use professionals to list and market our home. We have never worked general real estate.
We had the home off and on the market as stated, but not all by our own doing. Keeping up with the real estate market and paying for our own appraisals on the Florida house, we had always had our home listed
below appraised value except for the orginal listing that we felt was way overpriced.
There are empty lots in the same area and 3/4 acre in size for close to $600,000 to this day.
Believe me, we have been flexible with everything. I agree with anonymous who says it does not matter what someones HELOC or improvements are. The market determines what the homes are worth.
We have lived and owned homes in the west Broward area for the last 20 years.
Unfortunatly our realtor who had been informed about th show since Jan. 2007 notified us on the Open House day that he was not going to participate. Therefore, there was no ad or email blast sent out. Claimed his boss thought it would make them look bad. Whatever. We take full accountability for our situation, but hope you are aware of the complete version before passing judgement.
Remember, there are always 3 sides to every story.
A lease-option contract was signed with the renter who defaulted. This has led us to relist the property at 649,000, but any offer is welcomed. Let me know if you have an interested party!!
Andrea Bental
Andrea,
Based on your response, it doesn't appear that greed is your driving force. Instead, it seems like your realtor's greed is what's really killing you.
My suggestion: quit listening to your realtor. I'm not saying don't use a realtor (they're necessary to get your house on the MLS).
However, quit listening to your realtor's advice on pricing and selling strategy.
Spend some time researching the web and seeing what's out there (ziprealty.com is great). Try to be as objective as possible and as the blog author suggests, don't get tied down to just comparing your house to other homes in Plantation Acres.
Then, make sure you house is priced LOWER than the competition. If it's not, it simply wont' get any traffic.
Based on the comparable homes that the blog author posted, I hate to say it, but your house is overpriced. Sorry, but I've been looking at homes in your price range and $600,000 homes are simply nicer than the one your selling. Sorry, but I would much rather have a 5/3 in the gated Eagles Point than your house in the Acres. I know you have a big lot, but that's just means higher lawn care costs.
I also know that all your Acres people think your area is all exclusive, but without an HOA, you might end up with a neighbor who decides to build a multi-colored water slide or a guy who parks backhoes in his driveway. I see that crap all the time in the Acres. I guess that all part of the who pro vs. anti-HOA debate.
Regardless, I wouldn't get your feelings hurt about stuff said on this or any other forum. I would try and take some of the suggestions.
Good luck selling your home; I hope your success regardless of the path you take.
Andrea,
First, I apologize that you think that I find you "greedy." I don't. I can see how you would get that from my post, but I really didn't mean to come off that way.
I have absolutely no problem with people making profits (even large profits) on real estate. I don't consider it greedy; it's just good business. As a diehard capitalist, I hope that you and everyone involved make a sizeable profit in your transactions.
That being said, I have the opinion that your home has been and continues to be well over priced. I think you'll have a very difficult time selling at its current price.
I also think your husband is dead wrong if he thinks our local real estate market will turn around in 2 to 3 years. It's going to get MUCH worse before things get better. I expect to see prices well below 2003 prices within two years.
Of course, those are simply my opinions based on closely following the South Florida and national real estate markets. I could be wrong. You are free to ignore those two opinions if you like.
With all that being said, I honestly hope that you are able to sell your home as quickly as possible for as high of price as possible. I hope that you can capitalize on the show's publicity, which will drive your profit up even more. I wish nothing but the best for you.
On a side note for my readers who did not see the show, I would like to comment on the Blantons: Based on what I saw on the show, they seem like wonderful people who put their kids first. I don't doubt that they are hardworking, honest, and responsible. Anyone watch the show would feel the same way.
I hope my post did not reflect otherwise.
"Andrea", I saw most of the TV show and a few things in your story don't add up:
1. The real state style sign in front of the house, which was shown several times, said "FOR SALE BY OWNER". If you really were working with a Realtor the sign would have been from the parent company, not a Home Depot FSBO sign.
2. There would have already been an ad in the paper even if your agent decided not to show up at the last minute. You and your kids wouldn't have been putting up handmade flyers (also known as littering on private property) on the columns in area strip malls.
3. My best recollection of the interior and the yard isn't consistent with your description of it as a "complete updating". (No granite / stainless / maple, etc.) At best it was updated from 1977 to 1987... Nobody is going to pay extra for a new roof - the buyer expects to get a house with a waterproof roof.
No hard feelings here - lets just keep it real.
Anon,
I'll let Andrea answer for herself, but based on what she said, I believe that she was screwed at the last minute by her realtor.
As for upgrading, check out the pics:
Photos of Blanton Home
The kitchen looks fully upgraded to me with what looks like granite and stainless steel appliances.
Andrea,
If we are somewhat harsh and blunt, it is because we have been trying to inform people like yourselves for two years that in order to sell your home in this market, you must deeply discount it from the conventional "appraised" values.
There is and has been a 3-4 YEAR (not month) supply of housing on this market. A 6 month supply is considered a bear market and Nationally there is only a ten month supply.
I have taken the advice you will hear on this blog in marketing my own home and now have 2 offers on the table. At a price that is LESS than it cost me to build it in 2000. The 5 acre lot is free with the cost of the home. $229k for a 3000 sq ft home plus a finished basement. $75 per sq foot.
It was appraised at over $325. Unfortunately Andrea, the appraiser is NOT buying it.
It's really quite simple and yet people keep thinking that if they hold out long enough, they will get the appraised price.
We are watching thousands of people like yourself, chase this market as prices drop, never catching it and never selling, always priced a little too high.
Had you taken this approach in 2005, you would have sold and saved $150k. And it continues to cost you $60k a year to hold on.
I wish you the best of luck selling your home.
SFHB,
As always, your list is right on.
I will be plagiarizing it to post on the SS forums. LOL!
Good to see you back in the saddle, next time you decide to go to Europe, take a vote here first. We may not approve.
Here is the biggest mistake that I think sellers and realtors do: They rely on ridiculous appraisals to set their price.
Nearly every open house that I have been to in the last six months, the realtor or home owner has excitedly claimed that they were selling "below the appraised value" (just like Andrea did in her retort).
Realtor often talk about having "instant equity" becuase the selling price is below appraised value.
Just a few weeks ago, I went to an open house that was priced at $349,000. Soon after coming in the realtor claimed the standard of being "below appraised" value and the house had "instant equity." She even produced some appraisal certificate the "proved" the house was worth $405,000.
I challenged the realtor and told her that four identical houses in the exact same neighborhood were priced below $350,000. I explained that the $405,000 was not even close to reality.
The realtor spent a while trying to challenge me, explaining that the credentials of the appraiser. Then, she took a different tactic and explained that, because the appraisal was so high, I could have cash back at closing.
With all these inflated appraisals and realtors encouraging buyers to get cash back at closing, it is not surprising that there is so much mortgage fraud and foreclosures.
Of course, since appraisers use comps to set their appraisal prices, this sort of ties in with your suggestion that sellers should not rely on comps.
Just to let you know...
On another blog, Andrea let everyone know that she and her husband are REALTORS!!!!!
Her commentary on sixpercenters is also funny as crap.
That explains it all. Freaking hysterical.
Here's the quote:
"Karen, You didn't criticize me , however on other blogs SFHB repeatly called us dumber than you think. Like I said-we are both realtors but listed the help of a professional since general real estate was not our speciality. There is so much more to the story like realtors leaving doors open and I had items stolen from home. Another realtor on vacation and never returned contract to buyer within timeframe. Not really wanting to throw anyone under the bus during the show, and realizing that throughout the years of owning homes and condos throughtout Florida I have been very fortunate. Life happens. Again, alot more to the story. We are not looking for sympathy but just telling it like it is. Film crew was awesome and the family had a good time which is all that counts. Thanks for the comment on the kids--they are great!!"
Here's the link:
http://activerain.com/blogsview/228602/Did-you-watch-Please
SFHB,
You can feel sorry for them if you'd like, but I don't feel bad in the least. Their crappy ranch home will be worth less than their 2003 purchase price before they know. I see a short sale in their near future.
As far as appraisal goes, they can only use the previous data. In a falling market this might not give you a fair price range and value. It was the same way when the market was going up every month, appraisal was always a bit behind.
I cruised open houses yesterday, and stopped at one manned by one of the most prolific listing agents in this area. Jack of Cathy and Jack Prenner.
You cannot drive thru Lighthouse Point and NOT see dozens of their signs.
The canal home was priced at $1,185mil. Just reduced! Ok, now I know this market like the back of my hand so I casually mention that they are about $400k too high, and that this home would likely retrace to it's 2000 value of about $500k.
Our flustered realtor, face beet red shot back that they were selling these homes for over $1 mil in 1996. HUH?
Now I employ sales people in my business and have NO axe to grind with Realtors. I have one selling my own home. I also know good sales people walk a fine line when it comes to truth and facts.
So I will let you decide this one for yourself. MLS # F737045 (the home in question)
Sold 5/19/98 for $325k.
House next door 4221 Sold 8/96 for $250k.
Within a 1/2 mile radius there are several similar homes sold for $785k, $790, and several for sale in the $700's and $800's.
Now even if this home has some upgrades that the other homes do not, that does NOT justify $400k more. You can do a lot of marble and cabinets for $50-$100k.
While looking for opens, I noticed another home I was familiar with was no longer on the market and appeared empty. 1461 SE 14 COURT , DEERFIELD BEACH
This canal home had been on the market for $1.2 mil since the one two doors down sold for $1.2 in 3/05.
When I looked it up I see it sold 8/07 for $875k.
And another home several doors down
1411 SE 14 CT, is available for $749K.
This is huge considering Deerfield Canal homes were stuck at $1-1.3 mil till just this year.
The beauty of these declines in Lighthouse and Deerfied is that they are organic, not YET impacted by short sales and repos.
But next year look out below when the repos and Serial Refinances start hitting this market.
Hey--make an offer, any offer. I am not here to defend myself on a regular basis. Let us not lose sight of the fact that this was a TV show. Just a story for tv. I was contacted by them. SFHB was correct. Inside updated in 2003. Yes, realtor backed out even though all e-mails from SC show otherwise. I don't want anyone to feel sorry for me or my family. We do alright--there are alot of others in worse situations.
Just wanting to clarify that Dan's statement about the market picking up was not an indication of us wanting to hang on to the property, but merely saying that at the time of filming--all real estate analysts were predicting a turnaround during time frame he stated.
Since then, things obviously have worsened. My attitude as a seller has always been to price it low and to sell. I guess I should have not paid over $300 per appraisal or listened to agent based on all comps provided.
Reality is that it is after the fact. Let's face it, we all have the answer of what should have been done. If you have any more suggestions, let me know. I am awaiting an offer as I post. Wish me luck and thanks for all the advice and suggestions.
Loving life in the Carolina's!!!
Andrea Bental
Andrea,
You asked for advice, or I would not offer.
Buyers do NOT want to hear "make me an offer, seller motivated".
They want to SEE it in your asking price. This is one of the toughest markets Fla has ever seen, and the ones who get the action stand out from the crowd.
Maybe the TV show did that for you, there ARE some people who are still paying too much in this market, and you just got $1mil worth of free advertising, but I can tell you as a buyer AND as a seller, your price has to knock the socks off a buyer in this market.
I know you don't want to hear it, none of us do, but it's the simple truth.
Andrea,
You asked for advice, or I would not offer.
Buyers do NOT want to hear "make me an offer, seller motivated".
They want to SEE it in your asking price. This is one of the toughest markets Fla has ever seen, and the ones who get the action stand out from the crowd.
Maybe the TV show did that for you, there ARE some people who are still paying too much in this market, and you just got $1mil worth of free advertising, but I can tell you as a buyer AND as a seller, your price has to knock the socks off a buyer in this market.
I know you don't want to hear it, none of us do, but it's the simple truth.
While I understand that looking at old sales is not the way to price your house (and certainly not end '05 early '06), looking at what's comparable 'on the market' is not that great either if you are just looking at other over-priced houses. We sold in June and looked at sales within the last 2-3 months. It was tough to find that info, but we found it, and we had an offer every week for a month. Then we sold, because we found someplace to go; or so we thought - that fell through and we're now renting.
I don't know South Florida too well, but up here in NJ it feels like a waiting game. Sellers are waiting for a recovery, and holding fast on their prices. Buyers are waiting on price drops and/or stabilization. With the market dropping it's hard to buy. Buyers aren't looking for instant equity, they're worried about signing a 30 year mortgage commitment and having the bottom drop out.
Andrea, something I noticed on the show is that your 'take one' box was empty. I know that's a small thing, but every bit helps.
Cheers,
Judy
Andrea,
My husband and I have been looking at your home for some time. We love it! I understand it's in short sale...or do you still have a say in who purchases?
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