Is There Actually A Sky Up There Anymore?

by Allen Butler

Realtor, Audio Engineer

Author website

I listen to misery and woe almost daily. There are plenty of Chicken Littles out there reporting that the sky is falling. And it is! There’s no doubt that the real estate market is in the tank in many places in the country. It certainly is in my neck of the woods. The question needs to be not, “Why is the sky falling?” or “Is the sky actually going to touch the ground?” or even “Is there a sky any more?” but “What do I do with this new reality?”

In my market, equity is a very rare thing. The area that I service primarily is a relatively new area of metro-Phoenix. So new, in fact, that there are very few people who have any equity left. Unfortunately, many of them are throwing up their collective hands, and thinking something like this:

“My house in not worth anywhere near what I paid for it. It will not be worth what I paid for it for a very long time.  There are tremendous houses out there that are much better, much bigger, and more upgraded than mine, that are offered for sale for way, way less than I owe on my house.  Let’s see. . .I’m paying $2500 per month on my mortgage. The market is glutted with rental properties that are better than mine, and I can rent them for about $1,000 per month. Think of the money I’ll save! It makes financial sense for me to kick my house to the curb, go rent a better one for half-price, let the market continue to go into the tank, then buy a better one a few years down the road. What will I lose? My credit? Credit comes back. My mortgage interest deduction? Pah. . .a measly sum compaired to what I’ll save each month on payments. Sounds like a plan to me. . .”

An unethical plan? Sure, but one that is ultimately appealing. Who said unethical was synonymous with unappealing? This is just the people who are manufacturing a crisis to get out of an unfavorable position. There are plenty who are facing a real financial hardship.

So, more and more properties go into default, and real estate agents are dropping like flies. Fine. So what’s an agent to do who wants to stay in business? Follow the cheese.  Where is the cheese? REO properties, short sales, and buyers. Oh. . .and BPOs, if you wanna take pictures and fill out forms for $17.50 an hour. Motivated sellers, willing to compete with foreclosures, and have the equity to do so, are as rare as hen’s teeth.

Foreclosure and pre-foreclosure properties are absolutely slaughtering the average homeowner who wants, or even needs, to sell. I conducted a search for properties last night for a highly qualified and highly motivated buyer, and guess what I found? Almost every single property listed by a regular homeowner was tremendously over-priced. Just visibly overpriced. You could just look at the pictures, look at the amenities, and KNOW that it was overpriced. You don’t have to pull comparables to recognize an overpriced turkey.  This is going to make my job hard. I know that. It’s okay. I’ll find something.

So, what’s an agent to do? Follow the cheese. If you wanna stay in business, you have to follow the cheese. Not willing to work with banks? Are short sales too complicated and time consuming? Can’t generate buyer leads, because you have no “bait” (listings)?

Quit kidding yourself. You’re already out of this business. You just don’t know it yet.