Santa Fe in November

Santa Fe has got to be one of the loveliest places to live in the entire world! In October we had an inch or so of snow – enough for everyone’s excitement about winter and ski season to begin to flow. Now, in November, my 13 year old son, Abel and I took a hike almost all the way up to the top of Picacho Peak. Abel forged ahead up the trail and I was happily huffing and puffing behind him. There were only tiny patches of snow on the mountain. The air is clear and warm and the views of the Upper Canyon Road area and, as we got higher up, of Santa Fe are spectacular. Most of the deciduous trees have lost their leaves, but the pines are green as ever and there are rivers of pine cones flowing down the mountain. The Ponderosa pines are stately as they reach for the sky with their gnarled branches curving sideways, making intriguing patterns as we gazed up at them.

I give thanks very day to have landed in this heavenly high desert. One never needs a vacation in Santa Fe because every day feels like a vacation!

Sellers Unrealistic Expectations

Because of the plentiful inventory of homes in most markets in the United States today, Buyers have the opportunity to choose homes that are not only in spectacular condition but are priced well below previous market values. And, because there are so many homes from which to choose, these Buyers feel very justified in offering something even well below the list price. The Santa Fe market is no exception.

Recently, I had a Buyer who found an expensive home she liked very much. She was more than financially qualified to purchase the home and she decided to make an offer. In general homes in Santa Fe sell for between 3 and 5 percent of list price. Oftentimes that list price has already been reduced several times but, once the price comes down to where a Buyer is willing to make an offer, the purchase price is usually not less than 3 to 5 percent off the list price. I did a market analysis for my Buyer and we discovered that the house she wanted to purchase was listed at a price that was about $100,000 over the highest priced sale in the neighborhood in the past 6 months. My Buyer decided to make an offer which was about 12% below list price. In addition, this house which was located on Santa Fe’s beautiful Eastside, had multiple levels, a steep driveway and was in some ways a bit dated though in very good condition. The Seller was not anxious to move but health issues were making the move a necessity.

The Seller did not have a Realtor to represent him. My Buyer and I wrote up her offer and I prepared letter to the Seller explaining our rationale, letting him know how much my Buyer loved his house and mentioned that even though the offer may be less than he expected, this Buyer was well qualified and willing. I also included the market analysis showing the current market value of his home.

What did the Seller do? What would you have done if you had been that Seller? We have a declining market. Based on the market analysis the house was seriously over-priced. It had some issues such as, the over abundance of stairs and the steep driveway that would limit the number of Buyers willing to purchase the home. Another offer could be a long time in coming and in the meantime, the house would be following the market down. My Buyer was willing to negotiate.

If I had been that Seller’s Realtor, knowing the state of the market and knowing his personal health situation, I would have stressed to him that low offers were common these days, it was an honor to have an offer at all and to do his best to work with this Buyer who was clearly interested in his house. It is often much better to get the house sold than to hold out in hopes of a better offer. Often the first offer is the best and waiting in a declining market can lead to a situation where the Seller is forced to sell way below his initial expectations.

The Seller wrote me back clearly insulted by the offer and told me he would counter but only a very small amount. He then said he had done a market analysis a year ago and his home was well-priced and clearly better than all the others active on the market. I wrote back telling him again that I had a willing Buyer and was glad that he would be making a offer. My Buyer and the Seller had been about $200,000 apart. His counter offer was only a few thousand off the list price. I presented the counter offer to my Buyer and she felt that since he was not really willing to negotiate the price, she was unwilling to make another counter offer. I suggested that he did make the effort to counter, even though it was a small amount and perhaps she should just make her best offer and see what happens. She felt the effort would be hopeless and refused to negotiate further. And so, a Buyer lost a home she liked very much and a Seller is still stuck in a home that is no longer a good fit.

Knowing the Santa Fe Real Estate market, as well as I do, it will be surprising if that Seller gets another offer any time soon. That house is likely to sit on the market until the Seller finally has to take something less than she paid. The sad thing is that my Buyer would have settled on a much higher price than that offered. She may have been willing to come up about $80-100,000 to market value but the Seller was so caught up in his emotion about his house that he could not see the opportunity or the danger of passing up this Buyer.

Enjoying East Side Life in Santa Fe!

One of the joys of living in Santa Fe is our warm, sunny, temperate climate that allows us easy access to nature three quarters of the year. Santa Fe’s East Side has wonderful hiking trails. My favorite is at the end of Upper Canyon Road near the Audubon Center. These trails are named after Dale Ball who donated the land for these wonderful public trails.

Last week my sons and I had about an hour and a half of free time and we decided to take a quick hike.  There are so many places to hike within about five minutes of the Plaza and we decided on our favorite Dale Ball Trail. It was the usual warm, sunny day and we had a lung expanding  30 minute uphill hike to the first ridge where you can decide to go to the top of Pacheco Peak (another 45 minutes) or join the Atalaya Trail which is more commonly accessed at St John’s College.  We met friendly hikers and dogs along the way and had moments where we had to stop to absorb the breathtaking views.  At the ridge top the Santa Fe high desert revealed itself and we could see all the way to the Sandia and Ortiz Mountains.

Santa Fe has got to be one of the most wonderful places on earth to live.  Mountain Views are everywhere, the climate is gorgeous most of the year even in mid-August when everyone else in the country is sticky with heat and humidity Santa Fe offers cool evenings and wonderfully warm dry days. I cannot wait to hit the trail on the East Side again. See you there!

Santa Fe Real Estate – Seller’s Prerogatives

Residential Real Estate is such a fascinating business. Emotion and business can sometimes get confused and muddled to everyone’s loss. At other times, grace and generosity prevails and everyone comes out smiling. I recently helped a Buyer find a home he liked very much but it needed a fair amount of work. For example, it needed a new roof, a new heating system and new stucco. The house was priced just outside my Buyer’s price range but he really liked it. Given the work that was needed, the Buyer subtracted the cost of the potential work from the list price and made his offer.  The Seller paid over $50,000 more for the house than his current list price and he had been forced to reduce the price of the house several times already. When he saw the offer presented he blew up, was thoroughly insulted and refused to even respond to the Buyer.

Things have changed recently. Sellers who bought homes at the top of the market in 2005 and 2006, and have to sell now are feeling loss, pain and fear. The market often demands that they sell their homes for less than they paid and this hurts. It seems unfair. It feels like a betrayal of the American Dream.

Because there are so many competing homes on the market, for a house to sell,  it has to look like a model home, be in perfect condition and be priced under market value.  This is a huge challenge for most Sellers. And, as if that were not enough, still the offer that comes in is far lower than they ever imagined.

In working with Buyers and Sellers, I have seen Sellers react in many different ways and have learned that there are some reactions that are productive and some that can be destructive to the Sellers own interests. When a Seller receives a lower than expected offer, the response that cuts off all possibility is to be insulted, angry and refuse to make a counter offer.  While these emotions, under the circumstances are understandable, most of the time, Buyers intend no insult. They are simply considering their own financial picture and making an offer based on their own needs. Sometimes they may be testing the water to find out how flexible a Seller is willing to be. A more productive approach for Sellers in this current Buyer’s market would be to consider any offer at all a sign of interest and therefore, a compliment.  If the offering price is just not acceptable a Seller should make a counter offer anyway and see what happens. I have seen Buyers accept counter offers that have moved very little off the list price. Sometimes, the Buyer just needs to know that a Seller is willing to meet him part way. Other times a more protracted negotiation is necessary. And, sometimes, it works to take the focus off price by having a willingness to give in other areas such as appliances, repairs or closing/funding dates. There are innumerable ways to come to agreement but first it is necessary to step out of the raw emotion and consider the possibilities.