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September 28, 2009
Ocracoke Real Estate: ‘Pricing correctly’ is the key word – and that price is lower
By B.J. OELSCHLEGEL I sure wish I had a crystal ball. Sellers are inquisitive about when they can expect the market to turn around. This recession has been a lesson in living in the moment. We are all at a loss to be able to say anything more than what is happening this month. In our office, we talk about where you have to price a property to get buyers to notice. There is always the caveat of anticipating offers well below that list price. Some of the “big dogs” have been voicing the opinion that we have to clear out the foreclosures before we can see normal market activity. “Normal” would imply a market that is based in supply and demand as opposed to the slash and burn of a seller being forced to accept what he or she can get. Since buyers are currently driving the market, normal economic activity would even out the odds. One agency, up the beach, had 30 foreclosure contracts working at one time. In a conversation with a commercial agent, he felt he was seeing healthy activity in his restaurant leases. Go figure. It appears that this increase in the commercial market is opposite of what you would expect during a recession. On Ocracoke, the foreclosures have been less frequent. There have been a number of short sales, where the bank, holding the mortgage, is willing to take a loss prior to putting a property into foreclosure. If the mortgage on a home is $300,000 and the home owner cannot sell it at a price that would pay the bank their $300,000, the financial institution might allow the house to be sold for $250,000. The bank might see the handwriting on the wall and choose to cut its losses before the expensive undertaking of a foreclosure. If the bank is forced to foreclose and still cannot sell the property, an auction is inevitable. There are two auctions coming up on the island. Interestingly, one of them is an “absolute” auction. In this process, the highest bidder gets the property. Customarily, the bank requires a “reserve,” or minimum bid, in an auction. We’ll see how these Ocracoke auctions unfold. There is lot of buzz around the possibilities. Sales, on the island have been sparse -- only 12 sales since the beginning of the year. Nine of these have closed already, and three are in the hopper, due to close within the month. As a sign of the lack of activity in the 2009 market, five of these closings had contracts taken in 2008. The banking crisis, in late 2008, may have played a major part in slowing down the loans necessary to finance the sales. Another point of interest is that the bulk of these properties sold within 10 percent of their list price. In discussing the sale versus list price spread, with another agent, we agreed that the sellers who followed our advice and listed the real estate in the suggested range, were having greater success in selling. It’s hard to let go of what was. It has everything to do with moving on. If a property is priced correctly, it stands a greater chance of being sold. Two-bedroom homes are selling in the $300,000 range and three-bedroom homes are in the $400,000 range. There are some more expensive properties that are selling, but they have special attributes, such as water access or views. I am sorry to have to say that “pricing correctly” is the key word, and that is code for “much lower than even a year ago.” (B.J. Oelschlegel has lived on Ocracoke Island for 32 years and has worked in the real estate business for 26 years. She is a broker with Ocracoke’s Lightship Realty and a real estate columnist for The Ocracoke Observer. You can reach her by e-mail at bj@ocracokelightshiprealty.com) |
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