Dear Sue,
I met with our family’s real estate agent. I wanted to know what I should do to get my house ready for sale. I also wanted to know how much I could expect to get out of it.
I was shocked to hear how much he thought it was worth. The price he came up with is not much more than I paid for it six years ago.
I really like this agent but I feel like I should get a second opinion. What are your thoughts?
~ Baffled Bob
Dear Bob,
I definitely think that you should get a second and maybe even a third opinion.
You can still use your family agent, but interviewing others will bring new and fresh marketing ideas to the table. You will also be able to explore different price opinions.
Avoid choosing an agent based on price opinion alone. Agents do not create market value, they discover it.
What a willing-and-able buyer is ready to pay and what a ready-and-able seller is willing to take creates market value. The comparable sales are used as a bench mark in the discovery process.
Keep in mind that California’s median price is the same today as it was in 2001, $285,000.
I realize that it’s hard to believe, especially after reaching a median price of $594,530 in May of 2007.
Good luck with your interviewing process.
Dear Sue,
What is shadow inventory? I keep hearing bits and pieces here and there.
I heard that it’s expected to hit the market this year and we will see home values decline even further.
What do you know about it?
~ Worried Walt
Dear Walt,
Bank-owned properties that have not yet been released for sale to the general public are known as shadow inventory.
It’s been said that the lenders are holding on to them as a way of keeping home values up. They don’t want to flood the market and cause the values to drop.
Some have speculated that the properties are being held for accounting reasons. The lenders are reluctant to take further write-downs from losses when a home is actually sold in foreclosure.
When a home or asset is held in the bank’s inventory, the book value is typically the loan value. When the asset is sold it is booked at sale value, which today is likely to be much lower than the loan value.
I don’t know how many of these bank-owned properties are held in inventory.
In fact, I don’t know if there are any.
Some think that the whole shadow inventory idea is a conspiracy.
Others believe that there are as many as 7 million properties in shadow inventory.
If we see more property come on the market than the demand can support, we will definitely see a decline in values.
Let’s hope shadow inventory is a myth. It would be a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors in Auburn. She can be reached at seesue@seehometown.com, or on the Web at homedollarsandsense.com.
