Herman School of Business
Our Wednesday Update Post
We have been engaged to help a couple make a decision about an investment property they own and know is slipping in value. The question is can they sell it and get out from under heavy interest payments, or rent it to offset the monthly output…and is it worth even keeping the place as prices in the market are dropping and may make the debt higher than the sales price. Each week on Wednesday I will update you on my activities.
As it is my intention to utilize every Broker within twenty miles of the property, I have begun calling and compiling a list of them. I also recommended lowering the asking price from $ 558,000.00 to $ 485,000.00 to show the Brokers we mean business. This house started at an asking price north of $ 800,000.00 just over eighteen months ago, and has been lowered several times with no takers. My style is to negotiate from the bottom up. That means I want to set the price so low people will notice the property and begin to show interest. It does not mean we end up at this low price…unless the market tells us this is the correct price.
On Saturday I attended a house auction within 15 miles of our property, and this is a rare occurrence in the South Jersey area, although I suspect there will soon be many more of them. The auction was done by a company from Philadelphia, almost 100 miles from the sale house, but they managed to get five bidders to the auction and sold the property for about what a new buyer could buy a lot and build it for. In other words…the auction worked. You see, the property had been on the market for over a year with no offers. And although the auction price was lower than the sellers asking price…it did represent the real current market value of the house.
Speaking to several Brokers I find that our house is the largest and best looking property in the neighborhood, but also the highest priced by a considerable margin. I can attest to how wonderful the house is as I visited it after the auction I attended. Area Brokers all felt the earlier asking prices were too high once the market shifted downward, and that new homes constructed in a neighborhood nearby may be more appealing because all of those houses are similar and clustered around the golf course.
Looks like we have our work cut out for us. Can we create enough interest to bring buyers out of the bushes? Will area Brokers agree to spend time on a house four miles inland when they make so much selling those lush ocean front places? Would an auction be well received and get enough interest to get the job done? Stay tuned each Wednesday and get my thoughts…with no holds barred…because reality is the world I live in.
I have also discussed with the bank who holds the mortgage that we are trying to sell the property and may not reach the full amount owed at the end of this process. The bank referred me to the “short sell department” who will ultimately make a decision of what to do should we not have enough funds to clear the mortgage 100 percent.
- Posted: 27 February 2008
- Comments: 0
- Category: Business success
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