My conversation with my client earlier today started off rather pleasant, really.
Our talk was lighthearted – what were the plans for Superbowl Sunday, the latest buzz about work – the winter weather in Chicago and the prospects of warmer weather arriving soon – hopefully. It wasn’t the reason for my call, but the banter was really my attempt to put off the inevitable. I needed to have “the talk.”
“Your child is ugly.”
No segway – no transition – I just came out and said it.
“Your child is ugly.”
Again – silence. I inhaled deeply expecting the click and then the drone of the dial tone, but I could still hear the background noise of the TV on the other end of the line.
“Excuse me?” my client asked?
“Everyone thinks your child is ugly. Especially me.”
How many times have you run into an acquaintance – maybe at the mall – where their little infant or toddler was with them in-tow. You’re introduced to the little one – and perhaps you are taken off guard – a little. Let’s face it – sometimes some people have ugly kids. You wouldn’t say anything out loud or to the parents – usually – you’d smile – but in the back of your mind, you think – “geeshh – that’s one damn ugly kid.”
Okay – I really didn’t tell my client that her child was ugly – but in a round about way, I sorta did.
Last year, at the end of October, I again sorta initiated the talk – it wasn’t as harsh as “your child is ugly” – more like – “your child may not have everything going for him, but at least he has a nice personality”.
I’ve had my client’s listing on the market now for eleven months. We’d renewed once and reduced the price as well. Traffic came to an absolute standstill in October – miraculously, I showed it three times this week – but with no feedback. Just buyers starting their search – they’re testing the market. But time has finally run out – the listing was about to expire.
Rather than continue the masquerade, I finally came out and told my client what I truly thought their condo was really going to sell for in today’s market. The listing renewal was up for discussion. If I was going to continue to represent them in listing the home, I would not take it unless they made a roughly $60,000 price reduction. It may not be what they perceived it’s worth to be, but it is what buyers might be willing to pay. Problem was – they weren’t willing to hear the news last October and I quite frankly wasn’t quite – yet – willing to tell them the truth.
I guess I thought that telling my client that they had to make a $60,000 price reduction on a condo priced in the mid $300,000 range was too difficult. Maybe I too felt hopeful that things would improve.
It wasn’t until today that I thought – enough is enough – the truth is ugly.
How many ugly children are on the market today? Prior to making the call this morning, I was listening to the news regarding the latest housing statistics – the shear number of homes on the market through out the US. I also recently read that in Miami alone, the absorption rate is over 3 years. I really began to wonder what the impact would be if sellers understood just how ugly their kids were?
My clients want to move but they don’t need to move. The bulk of my conversation this morning was to revisit my client’s motivation to sell. Had their situation changed? Were they still okay financially? Was a sale dire?
It was motivated by a “want” to move up, but unfortunately, even in the past – short – three months, values have really fallen to the point that made their “want” to move simply no longer possible. The new target price was below their mortgage value, potentially prompting a short sale. Their equity is gone and hence the ability to move up was an impossibility – even exploring FHA financing on a potentially new home. Had their situation changed from want to need, their decision would have been very different, however, the call ended – pleasantly. I was left with one fewer listing.
In terms of running our real estate business like any other business, I believe we wouldn’t want to carry inventory, unless it was priced to sell. I don’t want to stock the shelves with “stuff” if no one is buying – or at least not buying at the wrong price.
I think we need to do a better job at cleaning out the shelves.
I often wonder what portion of this crisis is attributed to the ugly children? I am not referring to the short sales and foreclosures. As real estate professionals, are we acting responsibly by having the tough conversations with sellers to really align price with market conditions. If not, how many of us walk away?15 comments