Monday, January 23, 2006 | At any given time, in any real estate market, there are a number of sellers who really, really need to sell their homes.
Job transfers, job losses, divorces and disasters can all lead a homeowner to become what real estate agents call a “desperate seller.” These sellers need to put their homes on the market as soon as possible, and they need them to sell quickly. Making a profit, while nice, is not the driving force behind their sale.
For the past five years, experts said, desperate sellers in San Diego have not lived up to their names. Most homes that were put on the market over this period were soon snatched up by eager investors. For a while, it was unusual to see a home listed on the Multiple Listing Service for more than a couple of weeks, and practically anyone who sold was making a healthy profit.
But as the San Diego real estate market has noticeably cooled, the desperate sellers are once again becoming, well, desperate.
“They’re in a more difficult situation – those are the type of people who are going to have to take bigger and bigger cuts, in terms of prices,” said Alan Gin, professor of economics at the University of San Diego’s Burnham-Moores Center for Real Estate.
Every desperate seller’s situation is different, and analysts were quick to point out that there are precious few people who are likely to have lost money in San Diego’s superheated real estate market. Anyone who bought more than a year ago should be walking away from their home with a profit, no matter how “desperate” their sale, said Russ Valone, president and CEO of MarketPointe Realty Advisors in San Diego.
“The rate of appreciation was 5 to 11 percent in the recent years,” Valone said. “To me, an increase is still an increase.”
But as the market cools off, and transitions back to what some real estate agents call a “normal market” – in which appreciation hovers at more than 5 percent or thereabouts – desperate sellers would be advised to sell sooner rather than later, one Realtor said.
Diane Kane, co-owner of Help-U-Sell Realty Consultants in Poway, has been selling real estate for 20 years. Anyone looking at the possibility of an out-of-state promotion, a medical problem or financial hardship coming down the pipeline should get out of the home market now, she said.
“Sell now,” Kane said. “If you have to rent, rent. We have a lot of people in that situation, who are moving out of state in six months or a year, and they’re selling now.”
“Or at least trying to sell now,” she added.
Gin doesn’t necessarily agree with this synopsis. He said he can’t see the market getting much worse for sellers over the next two years. It will take longer for sellers to turn over their homes, and this will require giving up some of the equity homeowners have built up, he said, but he doesn’t expect to see any panic selling.
Indeed, Sharon Hanley, a Realtor in Oceanside who compiles a weekly report on sales activity in San Diego County, said sales traffic on new homes has actually picked up in the last week. Sales were “par for the course” for January, Hanley said, indicating that the market was actually picking up.
Hanley’s advice to desperate home sellers was simple: Get a reliable broker.
She said many sellers have been hurt in the past by self-interested brokers who represent to buyers that a seller is in a difficult situation and will take what they can get for a property. This creates a breakdown in the fair supply-and-demand factors at play when selling a property, she said.
“With a broker who’s not really going to push your deal, you can be hurt badly,” she said. “That’s probably the most important time to make sure you’ve really got a top-notch broker who really takes the job of being a fiduciary seriously.”
While experts agreed that the halcyon days are certainly over for desperate buyers, nobody is sure how the real estate market will play out over the coming months. For sellers with the ability and the inclination to sit out any incoming real estate storm, the message from experts is that waiting it out is the best option. But for those who really must sell in the next six months, the jury is out as to just how desperate they truly are.
Please contact Will Carless directly at