Herman School of Business
Wednesday Case Update
If you are just checking in…we are handling a case for a couple who built a house in Cape May County, New Jersey and have missed the top of the market, and are now losing ground as prices fall. They have engaged me to consult with them and work with the local real estate community to see if we can come up with a solution to this broken dream.
The owners involved started with great intentions, trying to use their excess income to buy a lot and build a house they could sell for a tidy profit. Two years ago the project was launched at what now appears to be the absolute peak of “lot prices” and construction costs. Suffice it to say for now that they are “under water” already on this investment. And that brought them together with me, after I made an appearance on CN8 television doing a spot on “emergency financial crisis kits.”
It is my feeling that they have only a few options and must make every attempt to gather information about each one before making the ultimate decision. They had the house listed for over a year and had come down several times on the price, until the house was at $558,000.00 when I entered the picture.
As an auction may be in the future here, I researched and found a house being auctioned in Cape May on 2/23. That auction was successful in that the price realized was approximately the cost of buying a lot and building a house from scratch. But there were no Real Estate Brokers involved. This past week I spoke with several of the area Brokers who all expressed shock that an auction was even being considered, yet all of them felt this particular house would be very hard to sell…not because of the way it looks or was built, because frankly it is a beautiful house that anyone would love to own; but rather, it sits on a lot four miles from the beach and is the most expensive house in that neighborhood. Similar homes just two miles away are available for about five hundred thousand dollars, but they are going unsold and they are located on a golf course.
As the auction is the “last resort” option, let’s mention the others. One was to immediately lower the price to $ 485,000.00 to show the area Brokers that the sellers are motivated to sell, even if they take a loss. You see, they recognize that a loss now may be better than a bigger loss later.
Next, my approach was to advise them to let the listing expire with the agent handling the matter, because there is already an expected loss, so paying that commission of six percent would be directly out of the owners already suffering pockets. This week I will send a letter to over 100 Brokerage offices announcing the lowering of the price, and the fact that the sellers will pay a three percent commission to a Broker who does bring a buyer.
We will also include in that letter an offer to Lease the house for only fifteen hundred dollars per month, less than the current monthly interest payment, but allow my clients to get most of the carrying cost of the house back, should they ultimately decide to hold onto the property until prices go back up. I believe that could take several years, but then the house will no longer be a “new construction sale” which probably has the highest appeal to buyers.
Also, it is my intention to write an article this week to submit to the local newspapers in that area…to get some coverage for the sale if we can. Stay posted each Wednesday for further updates.
NOW BACK TO THIS WEEKS BOOK SALE GOING ON:
OK. ANYONE WHO BUYS A COPY OF HERMANISMS ON THIS WEBSITE THIS WEEK…WILL GET A COPY OF THE INNKEEPER TALES INCLUDED FOR FREE!!!
JUST FILL THE ORDER FORM OUT FOR ONE COPY OF HERMANISMS AND I WILL INCLUDE A COPY OF THE INNKEEPER TALES WITH EACH SHIPMENT. LET ME KNOW IF YOU WANT THE BOOKS SIGNED. THE OFFER EXPIRES MIDNIGHT 3/7/08.
- Posted: 5 March 2008
- Comments: 0
- Category: Running a business
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