There is an article in today’s NY Times asking the old question of whether using a broker is right for some home sellers. The piece invited comments, and I shared my thoughts. I’ll adapt them for this post.
I am a broker who does business in Nyack, where the first two homes in the report are located. Ms Corvino’s issue (she has elected to sell her own home after 230 days with a broker) is not whether or not she has an agent; it is the fact that the home is overpriced, and not by a little. MLS records indicate that she bought the home in late August of 2005, literally the apex of the market bubble, for $810,000. MLS records also have her giving herself almost 10% appreciation in her 2008 attempt to sell when she listed it for $892,000, and at some point she lowered to (hold onto your hats, folks) $880,000. In reality, the value was most likely in the low to mid 700’s and may even be in the 600’s as I type this. Real estate didn’t go up 10%, especially if the home was not renovated. It went down 10%.
Given the fact that she purchased the property with a piggyback 2nd mortgage with a balloon payment, she is most likely upside down, which would make her, at best, a short sale. The fact that she can make a website and pay for a fancy yard sign will not ameliorate the mathematical challenge she faces. So while she attempts to “save” 40k in equity which no longer exists, a default on the balloon could become a financial catastrophe. I’ll bet her broker advised her to lower her price and she demurred. Brokers often tell sellers what they need to hear, and we are dismissed for trying to make a quick buck. 230 days later, she will sell her own overpriced, outdated home on Facebook. I’ll look for that follow up report in the coming weeks on the Times.
This Times article will no doubt get many eyeballs on the lady’s home (it got mine- check out 46Voorhis.com), but unless she can lower her price, she’ll have to face the reality that the public is ambivalent about the debt structure that determined her pricing strategy. I have blogged about this very fact last month. WebMD.com is not about to replace physicians either.
This For Sale by Owner is missing the first rule of home selling, which is the price the house right. A good broker would help her price the place, deal with a short sale if need be, and help her avoid a balloon payment default. Serious business, folks, and not something you can avoid just because you know how to make a website. So long as sellers are their own worst enemy, good brokers will gain market share. There are too many moving parts in a real estate transaction for the industry to mirror travel or discount stock brokers. A good broker remains worth their weight in gold.