It’s that time of year again; the point on the real estate calendar when we basically flip the page to January even though we’ve got almost two weeks left in December.
It’s not like a lot of houses sell on Christmas Day, and most people’s minds are on things other than buying real estate.
But a potential client asked me the other day, “Since there is virtually zero competition at this time, what’s the harm in listing?” And it made me think…
I swear, my office is emptier than the spot in George W. Bush’s heart for the poor!
My office is emptier than a Hagen-dazs container in the possession of Jonah Hill.
My office feels emptier than Scarlett Johansson after getting dumped by Ryan Reynolds.
My office is emptier than Eliot Spitzer’s bank account in early 2008.
My office is…
Okay, you get the picture.
This is the time of year when almost nobody shows up at my office other than support staff, and I truly feel like this guy:
A few days from now, I’ll be completely alone in my office, and the good times will roll!
I can walk around in my underwear, steal as many boxes of pens and pads of paper as I can possibly carry out the door (don’t think that I’m kidding!), and of course I’ll finally be allowed to cross the yellow line that separates the front lobby from reception…
Call it the “chicken-and-the-egg” phenomenon if you will, but most real estate agents aren’t working in late December because there’s nothing to work on! It’s not their fault (most of them…) that they have nothing to work on because the market has slowed to a crawl. You could argue that if more people were focused on work, then the market would be busier! But I have to say that in this example, the chicken and egg can be put one before the other because although agents are willing to work, the buyers and sellers just aren’t out there.
People ask me, “Why are you going to the office? What are you going to do?”
Oh, I dunno…..say, show up in jeans and a t-shirt as the suits have been hung up for the year; maybe drink coffee at my desk for three hours while twirling in my chair! Water my plants, make a giant chain of paper-clips, and perhaps flick a few elastic-bands across the room…
I certainly have my fair share of buyer-clients who are waiting with dollars-in-hand and with mortgage-pre-approvals, ready to buy their dreram home when it comes along.
But I find myself sending out weekly emails saying, “Another week has passed with no new listings that meet your criteria. I think as we move towards Christmas, the market will slow to a crawl, and we’ll have to pick the search back up in January.”
I don’t make the market, so how can I explain it any differently?
Every morning, and once every night just before midnight when MLS resets, I check the “NEW LISTINGS” and see a graphic like this:
This graphic was from Sunday night around 11:30PM and it clearly shows that there was very little activity (who lists on Sunday, anyways?) as we move into late December.
When the market is busy, you’ll see about 80 new listings in downtown, ie. C01, C08, W01. When the market is super-busy, that number will top 100, and when the market is in a peak period, we’ll see well over 120.
If I had to guess, I would say that on Monday, December 20th, we’ll only see about 25 new listings and most of these will be for leases.
I’m not surprised at all, however, since I would never advise a seller to list his or her property two weeks from New Years and only days from Christmas. Who the heck is looking at real estate? All that’s going to happen is your property will sit on the market into 2011, and when buyers do begin their searches again, your listing will be “stale.”
But I got a call last week from a lady who owns an investment property in The Distillery District and who has the financial flexibility to buy, sell, or hold her real estate position. She said, “If the money was right, I’d sell my own mother a week before Christmas.”
Wow. That’s nothing short of Trump-esque. Didn’t Warren Buffet say the same thing?
She has a tenant who has gave 60 days notice at the start of December and thus she’d be looking at listing in early February once the condo is vacant. So she asked me, “What’s the harm in listing my condo for sale now?”
A quick look on MLS shows that there is only one other comparable condo for sale in her building, and it’s been on the market for almost two months, meaning it’s clearly over-priced.
She asked me, “I know that ‘nobody’ is looking at condos right now, but if there’s no competition, doesn’t this mean I could have a competitive advantage that wouldn’t exist when I list in February?”
I was somewhat stunned; almost at a loss for words.
She had a great point; one that I simply couldn’t counter.
If there was essentially nothing on the market to compete with her property, then she would indeed have a competitive advantage.
So her next question seemed to follow naturally as she asked, “What’s to stop us from trying this?”
I guess in my mind, it boils down to these three points (and a fourth for good measure):
1) Who Is Still Looking?
I’m not being lazy here – I’m seriously making a point of the fact that 99.9% of the buyer pool has likely stopped searching actively. That’s not to say that if the ‘right’ property came out tomorrow that they wouldn’t have a look at it, but motivations are down for most people and I think that even if a property came out on the market that did meet their criteria, they might not have the desire to get out and see it. I understand that “no competition” presents an opportunity, but it’s a small one at best.
There are more parties to a real estate transaction than just the buyer, seller, and agents. What about the lawyers? Mortgage brokers? Banks? Property managers? When do these people start packing it in for the year? Deals can fall apart if the right parties aren’t present to do their jobs.
You have ten business days to get the status certificate for a condominium, and three days for your lawyer to review it. How many property management companies are closed for the holidays? What happens if you can’t get the status? What if your lawyer is in Cancun and can’t review it? Will you find another lawyer? Will you review it yourself?
What if your personal banker is on vacation? Or how about your mortgage broker – is he going to be able to shop your mortgage to all 40 lending institutions that he works with? Or will he just contact 2-3 of them over December 27th and 28th?
And where are the sellers? Have you ever tried doing a deal with somebody in Turkey? “This damn fax machine may as well be in Braille!” There’s the time change, the long distance, the faxes, emails, and PDF’s. It’s a nightmare…
3) Stale Listings
I mentioned this point before but I’ll expand on it. If you listed your property for sale on December 20th and it sat on the market into the New Year, it would show days on market or “DOM” on the MLS listing as “14” by the time the first Monday in January of 2011 rolls around. It’s going to compete with all those new listings and their shiny new “0” days on market.
Buyers have a belief that if a property has been on the market for 3-4 weeks then it represents an opportunity to make an offer that is substantially under the asking price. If we’re in the second week of January when there’s 80+ new listings each day in the downtown core and your property has been on the market for 24-25 days, buyers are going to see blood in the water.
It doesn’t matter that you spent two weeks on the market in late December when nobody was looking; buyers don’t put that much thought into things. They’ll just see that you’ve been on the market for close to a month, and they’ll assume a price reduction is coming, the property is over-priced, or both.
You can always re-run the listing, but agents will look up the history and tell their clients, “This is the second time the property has been listed inside of a month.” It doesn’t seem fair – but that’s what’s going to happen.
This doesn’t apply for the lady who called me last week, since she has a tenant living in her condo and she won’t be inconvenienced on a personal level. But you have to consider the nuisance associated with a potential buyer who wants to view your property on the 23rd of December at 6:30PM. Are you home? Do you have company?
What if somebody wants to spend the week after Christmas “researching the market,” and this means looking at properties that he has zero desire to buy. I have several clients right now that are “researching!” So how will you feel when a potential buyer, who has no potential to buy your property, wants to come by on December 27th at 2:00PM when you’re reading the newspaper and warming your feet by the fire?
The lady who called me last week said something to the extent of, “I’d sell my own mother if the price was right,” so maybe some people fail to see any inconvenience at all.
But if you worked hard all year and you’re trying to enjoy the holidays, do you really want to be stuck with an active listing?
Those are just my two cents, for what it’s worth…