Monday, May 26, 2008

Sellers Can Only Go So Low

From the Register Guard:

List a house. Take it off the market.
List it again. Drop the price by $10,000. Shave off another $10,000. Run smack dab into your bottom line.
These are the twists and turns that home sellers such as Tom and Debra Trammel are facing with Lane County’s sluggish residential real estate market.
Lane County sellers are waiting 89 days on average for the right buyer to come along. But in some areas of the county, the time stretches to 141 days or more, according to the latest RMLS monthly report, for April.
But today, the Trammels are waiting even though they’ve got that prime real estate attribute: Location. Their three-bedroom home with sunken living room and stone fire place is on 2 acres next to Dorena Lake and the Row River bike path outside Cottage Grove.
“You could almost throw a rock and hit the water,” Tom Trammel said.
The Trammels decided to retire in Florence after relatives who lived there became sick and needed their help. Tom had already left his job at Starfire Lumber in Cottage Grove, and Debra, a nurse, transferred from Sacred Heart Medical Center to Peace Harbor Hospital in Florence.
All that’s left is to sell the Dorena Lake property.
“We’re hoping it will sell real soon. It’s a nice home,” Tom Trammel said.
But buyers now are “extremely picky” and especially tight with their cash, said Dennis Pease, agent with Remax Integrity in Eugene (who doesn’t represent the Trammels). Pease said it’s hard just to get buyers through the door.
“It used to be you’d take a buyer out and show them two or three or four homes and they wrote an offer. And now you might show them 20 homes and they’re still kicking around whether they want to write an offer,” Pease said.
Buyers insist on writing low-ball offers, he said. If a house lists for $250,000, they want to offer $225,000. When the offer is rebuffed, the buyers just move on down the street. There’s plenty of listings to choose from.
Sellers can only go so low, he said.
“People who bought two or three years ago, they don’t have any equity. By the time they pay a commission and their closing costs and pay the loan off, they’ve dropped the price as much as they can.
“A lot of these sellers — if they bought in the past three or four years — they’re either upside down (losing money on the sale) or close to it. A lot of them can’t lower the price. That’s why the houses are sitting.
“The days on market are growing because a lot of these sellers are at their bottom line. They just can’t lower the price anymore.”
That’s not the case with the Trammels. They bought their house 24 years ago. They can afford to be patient.
On the other hand, it’s costly for the couple to drive back and forth from Florence and it’s not good to leave a place sitting empty for too long, he said.
So the Trammels dropped the price to $329,000, down from their initial asking price of $349,000.
“We’re not going to lower it again,” Tom Trammel said. “It appraised at $345,000 last August. We’re not going to give it away.”

Cottage Grove is about 25 miles south of Eugene and it doesn't really have much of an economy of its own. Most people commute to Eugene for work so this area is definitely feeling the pain of $4.00 a gallon gas prices.