Dear Homedebtors…

After doing property profiles on AHB day in and day out, it has come to my attention that most sellers are still overpricing their property for sale. As a potential buyer, I would like to share something with them. Perhaps they are still in denial and believe that buyers are willing (and/or able) to meet them at their sky-high prices. If that’s the case, this should clear things up. If I spoke to a seller today – this is what I would say to them.

Dear Sellers,

I am writing to you on behalf of myself and many other prospective buyers regarding the current housing market. This is not an attempt to mock or ridicule you for your past actions, but rather a letter to inform you of our thoughts as it relates to the buying and selling of real estate today. Surely I cannot force you to read this letter anymore than you can force me to buy your house, but it is to your benefit to at least hear what I have to say. Whether you agree or disagree with me is another story.

There’s no roundabout way to put it so let’s just get to the point. If you are serious about selling your property – price it to sell. If your property has been on the market for more than a month, then it is not priced to sell. Period. The market price is what we, the buyers, are willing to bid regardless of where you set your asking price. If you set the right price, then someone will put in an offer for it – even in a down market like we’re in today.

Think of yourself as a buyer. When you bought the property you’re currently trying to sell, what did you consider? Did you buy it because the current owner said it was worth the asking price? No, I didn’t think so. You bid whatever you thought the property was worth at the time. It’s the same with the potential buyers looking at your property today. Unfortunately for you, most buyers today think the market (especially here in California) is wildly inflated and subject to a steep correction for months or years to come.

That being said, there are still some people who are in the market to buy right now. They just don’t like the asking prices. Generally speaking, these people are not trying to offend you with their lowball offers; instead they’re just trying to compensate for the reduction in home values they expect in the foreseeable future. Wouldn’t you do the same if you were on the other side of the fence? Be honest with yourself. Denial is not a solution and can be devastating to your finances.

Instead of chasing down the market with small, mediocre price reductions every few months I suggest you reduce the asking price today. Not tomorrow, or next week or next month – today. Everyday your house sits on the market unsold is another day you have to swallow carrying costs and maintenance fees. In addition, you also risk losing even more money as the neighborhood comps drag you deeper into the red. The outlook does not look good. With sales volume falling off a cliff and prices starting to slide even in the more desirable areas, buyers are more cautious than ever about entering the market. Your buyer pool will shrink as the housing correction continues and the decline in home prices will be the only factor that will bring buyers back into the market.

If you think things are going to “turn around” or “pick up in the spring” then you’re hanging on a very thin thread. It doesn’t matter what you think. Buyers don’t care what you think your house is worth or what your realtor/neighbor/wife/dog thinks its worth, nor do they care that you need the money to get out at “breakeven” or to pay off that HELOC. They also don’t care what you banked your whole retirement on this property or that you overpaid and looking for someone to bail you out. It doesn’t matter to them. All they see is an overpriced house they’re might not even like that much.

Again, if you’re serious about selling your property – reduce the price. Buyers don’t have to buy, but many sellers have to sell. We have all the time in the world, but you don’t. If you did, you wouldn’t be selling right now. Wouldn’t you rather just rip off the band-aid than to peel it off slowly? Either way, it’s coming off. How it’s done is up to you.


8 thoughts on “Dear Homedebtors…”

  1. Seller may reply

    Dear buyer,
    Thanks for buying into my neighborhood! What a great neighborhood my house is in. I brought my house long time ago and it’s completely paid off. I will only let it go if someone really appreciates its greatness, otherwise I don’t mind keeping it for another 30 years.
    I agree with you that house price in general is dropping, and I don’t see my house being an exception. However, the value of dollar is depreciating even faster. Why should I exchange one depreciating asset (my house) with another asset that’s worse in keeping up its value? Fed reserve is printing new money faster than houses being put on the market. So time is on my side.

  2. Dear Seller,

    That’s great – keep it for another 30 years. Why is your house even on the market then?

    – Buyer

    As a side note, sellers who have paid off their property and/or bought 30 years ago are more the minority. Most of the properties on sale today have not been paid off so they’re not actually homeowners, they’re homedebtors.

  3. “Fed reserve is printing new money faster than houses being put on the market. So time is on my side.”

    If that were true then shouldn’t the housing crisis be over? We’re still in the early stages of the correction and home prices will probably drop faster than the Feds can print the $1trillion needed to save the credit/housing market. Time is not on the sellers’ side.

  4. Dear Buyer –

    Ha, you got me. Obviously, I’m not your target. I’m not really interested in moving, but if some fool comes along with a Bag of Money and a Box of Stupid, I want my home to be available so he can overpay and give me my lucky break!

    Surely, it’s worth it for me to do so. After all, it costs me nothing to keep the house listed, because either I am a Realtor or I’ve got a Realtor friend who owes me. He thinks I’m crazy too which is why he’s not really spending much money marketing my property.

    Anyway, you can call my a moron if you want, but this is the cheapest lottery ticket I’ve got. Wouldn’t you do the same if you were me?

  5. The Buyer’s answer, of course, is that the depreciation of the dollar versus a basket of foreign currencies only matters to the extent that said depreciation (i) is reflected in price inflation in the economy generally or (ii) leads to foreign investors buying a bunch of single-family homes in NE Los Angeles. Thus far, inflation (which has numerous causes other than just dollar depreciation v. other currencies) has increased only marginally and there’s no evidence that foreign investors have any interest in using their suddenly more valuable Yen or Euros to invest in single family homes.

    The upshot is that housing prices are depreciating 8-10 times more quickly than inflaton is increasing, so if you’re waiting for inflation to make your asking price anything other than a joke, you’re not really a seller and you’d do everybody a favor by taking your house off the market.

    PS: Incidentally, current inflationary pressures have virtually nothing to do with any increase in the total money supply– because there hasn’t been an increase in the money supply over the past 2+ years, despite the general misimpression that the Fed is printing money at an absurd clip.


    Inflation is creeping up because of decades of US current account deficits and general asset price inflation (e.g., oil, fertilizer, metals, etc.) caused by the rapid economic growth of China, India, Brazil and Russia.

  6. Actually, no, I wouldn’t. Unless I really didn’t plan on moving anytime in the next five years. Having your house perpetually “for sale” will cause potential buyers to either ignore you or aggressively low-ball you once you do need to sell. You’re also kind of screwing your neighbors, since giving potential buyers the impression that houses in your neighborhood are languishing on the market, and that the supply of available houses in your area is larger than it actually is, just diminishes demand and home values.

  7. Sadly, the average seller probably won’t even understand your point. I think you should change your name to InformedBoy or something. Clearly you’re not idiotic 😉

  8. The seller would say…

    That’s great – keep renting for another 30 years. Why are you even on the market as a buyer if you are not serious about buying.

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