There are four distinctly different Salt Spring Real Estate markets:
Each market seems to move at its own rhythm. Pareto’s Principle, the 80 -20 rule, applies to Salt Spring real estate. I find that only 20% of the homes in each category are in perfect, updated, mint, move-in shape. 80% of the homes for sale could be classified as project homes. However, most people do not move to Salt Spring to take on a large renovation.
This winter (2012-13), Salt Spring Island real estate is a TOTAL buyers’ market. However, only some sellers have lowered their prices to reflect the large number of listings. Do not underestimate a seller’s ability to overprice. Whether it’s a boom market or a down market, greed holds no bounds. I have only had one seller (Mrs. M) say to me “just sell the place fast.” Her home sold in less than 30 days for a fair market price of $330K. Properties that are priced to sell are bought quickly and frequently have competing offers. If the owners list at a real accurate/realistic listing price (based on value and accurate CMA of similar homes that have sold) and owners are not taken over by the “greed cloud,” the home will generally sell. In June we listed a home at a realistic price and had an offer in just days. On Salt Spring, this type of scenario seems to be the exception to the rule. A good number of sellers interview 3 or 4 agents and tend to list their home at the highest suggested list price. I personally try to only list the house if it is very close to an accurate/realistic listing price.
I am not aware of any rules against overpricing, according to the BC Real Estate Service Act (which all agents follow). Overpricing is common because the listing agent’s duty is to the seller and usually the goal is to sell at the highest price. In my opinion, overpriced homes will sit and stagnate on the market and years later sell at below what would have been an accurate/realistic listing price.
How REAL ESTATE AGENTS MAKE MONEY WHEN A LISTING DOES NOT SELL!
In his book, Bought Not Sold, Ray Wilson writes about overpricing and agency interest (the “upsides”), “The same home advertised over a long period loses its attractive power, but the optimum is to have it around long enough to draw as many buyers as possible before being sold. For this reason, the tendency of owners to overprice their homes can have an upside for the agency, preventing the “premature” sale, letting the home attract buyers for other sales until the owner adjusts to its real value.” Wilson also states, “LISTING AGENCIES LIST TO ATTRACT BUYERS.”
Buyers need to make sure they are buying value and not an overpriced home that has been listed for the sole reason of attracting buyers. Yes, this is a bold statement, but on numerous occasions I have asked listing agents to send me the comparisons they have used to price the homes they have listed. Usually they reply with comments such as, “It is a unique property…Salt Spring has a very long sales cycle… the sellers are prepared to wait out the market.” There is no such thing as a long sales cycle. If a home does not sell after a reasonable amount of market exposure it is only because the home is overpriced for the present market.
I see a lot of homes on Salt Spring that are re-listed over and over with multiple listing agents. The sellers blame the agents for a lack of sales activity and are in denial that it’s all about price and value.
Most buyers do not want to buy when the market is down. But, to make money in real estate (or any other market) you have to buy at the lows. And, yes, this is the low of the market. The goal is to find the really great deal that fits your needs.
This year the sellers are nervous and if you are a strong negotiator you can get them down in price (if they really want to sell). If you are not a strong negotiator, you can ask me to help you. This is my specialty. There are some very basic tactics that we can use in a declining market that will get you the deal you want. If you call or email me I can tell you about this simple, but effective way of getting a deal. In a nut shell, it’s all about not falling in love with one home but finding two or three that will work and seeing which one of the three sellers has the most motivation to sell. It is a very simple system of low ball offering. In a down market never think you are going to tick off a seller. They have probably never seen an offer and some will jump at the first one they get.
Real estate is a predictable market. With some degree of certainty I reasonably predict that 2013 will see a market that goes sideways with no price increases and the prices are generally slowly trending down. It really comes down to the basics: location, state of home and price. Most homes that will sell in 2013 will have great locations, will be staged perfectly and will be priced comparable to the sold homes.
Obviously I like nice homes that represent real value (i.e. location, state of home and price). By now you have probably also surmised that I dislike overpriced, poorly turned out homes. They do nothing more than clutter the market. Pareto’s 80-20 rule works so well when you look at Salt Spring real estate. 80% of the homes for sale need lots of work and approx 20% are stunning, updated homes in mint shape, and ready for you to move into. These fine homes are in short supply, yet these are the ones that 80% of the buyers want. They will sell fast and some will have multiple offers. The not-so-nice homes will sit and sit, then be re-listed over and over and finally, when the owners realize their home is overpriced, they will be reduced and sell at a deeply discounted price. The market tends to punish these stagnated homes.
If you are into fixer uppers there is no shortage. One could say there is a life time supply. To buy a fixer upper one has to get an amazing deal or it is not worth the time and energy. As a general rule, double all the expected costs of doing a reno on Salt Spring. And remember the basic Salt Spring real estate rules to follow: Sunny location, water view, no road noise.
A complete year-to-year price history of sold homes on Salt Spring is available. (Note: email Scott firstname.lastname@example.org for a password to this page).
Good luck and make sure you buy your new Salt Spring home wisely. If you really want to get a deal, please check out the Advanced Search here.