The current economic conditions are like none we’ve ever seen before—-some of it influenced by corruption we’ve never seen before.  During this time of significant unstability, I don’t put much credence in statistics such as these.  The market will slowly regain some stability, and hopefully with it some more realistic mindsets among sellers and realtors.  I don’t entirely blame those individuals, it’s hard to let go of past nirvanas. Those most motivated to sell will not tolerate lengthy “days-on-market” durations and those with less motivation will sit and wait a looong time to sell their properties.  Must be damn hard to make a living as a realtor these days.

The problem is not really the cost of housing per say.  It’s the fact that wages have not been increased to match the cost of living.  So both are really to blame.  The cost of housing increased in the good days due to appraisers and realtors overpricing homes causing an artificial bubble in housing costs. Not to mention builders charging 2x what it cost to build or more. At least that’s my belief.  The wages in Montana in general though are pitiful at best.

I don’t get where you people’s thought process comes from.  Sellers, appraisers, and Realtors don’t control the prices of real estate any more than the thermometer nailed to the tree outside my window controls the temperature.  If they did, prices wouldn’t be going down.  Buyers set sale prices and their buying patterns are controlled by their lifestyle choices and economic condition, the latter of which has caused the current downturn.  What caused the housing bubble was Fed pressure put on Fannie Mae and Freddie Mac to make home ownership available to more Americans, even those that really couldn’t afford it.  That coupled with their lack of regulation of mortgage backed securities took the whole house of card down.  I guess it’s difficult to implement regulation over those who’s money got you elected…

Oh, here we go again blaming the Realtors and Builders. Sellers got greedy with the housing boom, my Realtor here wouldn’t even list some properties because she knew they were asking a price that was outlandish. Now these greedy sellers are stuck with homes they could have sold when the market was good. I don’t feel sorry for them. Builders do not over-price that much, they have to pay their subs, vendors, architects, city officials on plans, etc. These people raise their cost and materials were more expensive.

Everyone is to blame- including realtors, and sellers. People think they should get back what they payed for their overpriced home, and with the realtors encouragement, price the house accordingly.  Of course, when building supplies are in high demand, vendors will raise the prices, contractors will have to pay more, sub-contractors will charge more, etc., etc. All reflecting the higher cost of building and owning a home, and consequently affecting the economy as a whole.

Blaming realtors for the price of housing in Flathead County (or anywhere else) is simply a sign of ignorance of how the system works.  Realtors don’t set pricing…sellers do, but the market is what dictates the selling price.  Appraisers (good ones, anyway), either determine whether the selling/buying price can be substantiated.  And in today’s market, the difference between price (listing price), cost (actual selling price), and appraisal (what the market says it can support in terms of comparable sales) may be three different numbers.

Wow, Levelheaded1, are you really that uninformed (used polite word)??  If you beleive that realtors don’t significantly influencemarket and the setting of price on a property… then you need to come out from that cave and open your eyes.

And I’m not necessarily saying that a realtors influence is bad.  Frankly I appreciate a good realtors advice, for they have intimacy with the market that is invaluable.  Ultimately the defininion of “Market Price” has stood strongly and withstood the test of time:  “What a willing buyer and willing seller agree on.”  the operative word being “willing” and as that willingness ramps up or down, so too goes the market.

Firebeam, the cave that I live in, I share with my wife, who is a realtor, and has been for several years.  But like posters here, there are good and bad ones.

A realtor does and should advise its clients what a reasonable price might be, particularly if they do a CMA.  In almost all situations in today’s market, my wife has the difficult job of telling sellers that their property probably won’t sell at the price that they would like to put it at, when they choose to list it.  She has declined listings from unrealistic sellers.  Most realtors in this market know that the market is flooded with inventory, and the competition is steep…yet still, there is a significant percentage of sellers who either want to, or need to get the price that they thought it was worth 24 months ago.  So yes, a realtor has influence, but the seller ultimately determines listing price, and if a buyer does happen along (a relatively rare occurrence today), the buyer is in the driver’s seat…and knows it.

I think I’ll go back to my cave now.

Well, at least you save energy on air conditioning.  Serously, I didn’t mean any offense.

Yes, it is a cool place to live.  No offense taken.  It can be difficult to state all sides of an issue when commenting on a single point.

As someone who spent 2 years looking at property and making offers I can tell you that Realtors, Appraiser and Sellers in your area DO set the prices.

Many of these people are related by family or by business and the sellers tell the appraisers what they want the property to be appraised for. They hope some out of towner will come along and make their appraisal golden as they have done in the past.

How do we know?  We made offers on several properties. Some offers were to be determined by appraisal. The appraisal came in at 2005, 2006 and 2007 levels even though there were no sales to justify the appraisals. Outside professionals evaluated the appraisals and came to the conclusion that the appraisals were bogus and not justifiable.  In states like CA, NY, FL the appraisal boards would be all over the appraisers and take their licences or fine them.

These appraisers are not stupid, so they must be doing the price hikes intentionally. How can you justify a 5% decline in price from 2007 when the stats show 25-40 % decline in value and 90% decline in sales?

Not up in MT.  Therefore appraisals are not worth the paper they are written on and sellers are not going to get those sky high prices like they did in the past. The out of staters are catching on to what the local already know.

We love the area and would pay a reasonable price but not a 2005-2007 price that is all Blue Sky. Faking appraisals wont work and probably will cause values to be questioned even more and will result in lower prices.

Too bad they cant be realistic and honest with real buyers.

Firebeam, Blood Gulch, Nancy all see what we see. Not good.

We are looking at other states, will keep checking on beautiful MT.  Joe

GeneratorJoe, I’m not disputing what you’re saying…it can be the truth.  But you say that Realtors, Appraisers & Sellers set the price.  I say that in the end, the Seller sets the listing / asking price.  Period. 

I’m saying that a good realtor SHOULD advise their client, buyer or seller, to be realistic with whatever the market dictates, in order to facilitate the sale.  I’m also aware that there are both good and bad realtors (excuse me, I mean Realtors…not all licensed real estate agents are members of the NAR…hence Realtors).

My wife just turned down another listing last week because the seller was unrealistic about their asking price, and it would have been an exercise in futility.

I contend the following, based on living in “my cave” (where I had previously been banished to):  A good listing Realtor should advise the seller (who they represent), of what the market will support in terms of value, when setting listing prices.  And a good Realtor will always remind you that you can ask any price you want…listing prices are probably more meaningless in this market than anytime this decade. 

A good Realtor who is representing a Buyer should have a handle on the most current market trends, and offer every bit of insight available to help the buyer make a decision.

My wife is occasionally called upon to represent both sides of a transaction…dual agency.  Depending on how complex or large the transaction is, my wife’s belief is that you cannot generally do an adequate job of representing both buyer and seller at the same time.  There are situations where it’s find, but in most cases, she shies away from it, preferring to bring in another agent whom she trusts to represent the buyer on one of her listings.  It’s about being straight up.  It would be pretty difficult for an attorney to represent both sides in an argument, correct?  Why is this any different?

An Appraiser’s role is either to support the agreed upon price with either a replacement cost analysis, a recent sale analysis, a bracketing of values on a difficult property, or by some other acceptable means.  I have had Appraisers do property appraisals for me that have been thrown out, because they used listing prices instead of selling prices to support the value, or used comps that were geographically unrelated.  I’ve had local appraisers miss the mark, who have been doing it for over 30 years here, and for less than a year here.  So there are both good and bad ones here too.

At best, the Flathead Valley real estate market is “interesting”, today.  If you’ve encountered sellers who want 2005-2007 prices still, all I can say is that you’re not alone.  Yet there are a growing number of sellers who are realistic about the value of their property and will set a realistic market price. 

First off, I would suggest that you not give up on the Flathead Valley, and second off I would suggest you find a more competent and honest Realtor.

Good comments by many responding to the article.

However, it’s not all black or white.

Most importantly, the rules of engagement in resort areas are not typical to the home stadium in which many a buyer lives.

Several issues need understanding. One of most importance is to realize sellers have preconditions imbeded in their minds. Taking the blinders off is not easy. Right now the market has experienced a major shift. Some sellers refuse to buy in to the reality. When all the sellers refuse to lower their numbers in one area, such an action can create it’s own financial climate.

Buyers become non-believers. Why aren’t these sellers dropping their drawers like everyone else?

When a Realtor suggests a lower price than what the seller has in mind, the seller often thinks the agent is pricing low for a quick sale and quick commission. No consideration to the real value. Sellers won’t budge much to the agent’s price opinion.

Appraisers are targets from both sides. Some think: If the buyer sees a number too high to their liking, it’s because the appraiser is in bed with the agent. If the seller sees an appraisal too low, it’s because the appraiser is in bed with the agent. Both the agent and the appraiser gets attacked from one or the other side.

Frankly, I don’t mind seeing many appraisers get the abuse but there are some that are professional, top to bottom and shouldn’t get the bad rap.

So, what’s the real deal?

Here’s an example of buyers that went away wondering if the market is rigged with collusion.

Canadians read in US papers about market crashes in the US. Los Angeles, Miami, Las Vegas. $500K homes going for $200K-$300K.

Illusion becomes delusion.

Many of those homes did not have mortgages or had monster equity. The seller could let them go for less than the appraised value. Those homes were not in Montana. Some are. You have to keep turning over stnes to find the right one.

Canadians came down, offered 2 on a 4 and went home empty. Now they are coming back and offering $300K on a $400K and getting it for $315K.

Many owners can afford to wait it out. Many owners have a $350K mortgage and cannot accept a $300K offer.

A good agent means money in your pocket whether you are a seller or a buyer. Even the best cannot over come the rigidity of some sellers and some buyers. There are lots of parts to the puzzle. Some fit well, other won’t fit at all.

Old adage: if you don’t know your diamonds, you better know your jeweler.

Levelheaded1 thanks for coming out of the cave for a few.

I dont disagree.  My agent did a great job getting everything together and representing us.  My wife is a Realtor and Appraiser in another state but its all the same rules (mostly).

The sellers agent is totally unrealistic and makes her seller think she is right.  The appraisers used listing prices and think that is fine, which it isnt.

The market will set the price and it wont be anywhere near 2007 levels. I dont think you have even hit the bottom there yet, but people dont want to face the facts.

It obvious, if the prices were reasonable someone would be buying something.

We will watch and hang onto the money while we wait.

MontanaTrace, you hit the nail on the head.  Thank you.

GeneratorJoe, I think your strategy is wise.  The desired property won’t fit if you have an unrealistic agent (they definitely exist) and a manipulated seller.  You can’t change that, so look for another property where the chemistry is right.

I find it interesting that when a market is going up, the rules of engagement are a lot easier to understand than when the market is correcting.  Those who are in real estate development / financing as a business, understand the correction, and cut their losses.  Those who have an emotional attachment to their property maintain a delusional opinion of its value.  A professional agent can help bridge that gap, but is not always successful.

I know an agent who took a listing at $500,000 (felt it overpriced for the market, because it had a couple of unfinished points, and in that price range, everything has to be “perfect”).  The agent advised the seller, after getting feedback from a couple showings, that the listing price needed to come down.  The seller sqawked loudly, was rude to the agent, but came down to $460,000, insisting that he could not possibly take less (even though the agent advised that it was still overpriced).  After several open houses with no one coming to look, and other marketing efforts (and a couple of more showings), the seller announced to the agent that he was going to drop the listing, and go to a self-help website and list it for $399,000.  The agent tried finding that FSBO website, that someone had sold him on, and could not find it on any type of search.  The seller is desperate, the “rock bottom price” they will take has been a moving target depending on the clarity of the delusion, and because the tide has moved out, the property is not appropriately priced for what it is, the location is only marginally attractive, it hasn’t sold.  As we all know, a rising tide floats all boats. 

MontanaTrace is right on…and this is just one example of what he is saying.  The market will determine what this particular seller’s property is worth.  While we are starting to see some activity and interest picking up in this real estate market finally, the past 12 months has definitely been a downward, painful spiral.  Some sellers have been quick to adjust, and some have not. 

As my wife tells prospective sellers…“do you want to price it for what you think it may be worth…or do you want to price it to sell in this market?”  Those are two vastly different numbers.

I was recently able to sell a property in this down market and I attribute the quick sale at a fair price to my realtor and our conversations prior to listing.  I wanted a quick sale and I listened to his advice about pricing accordingly.

You were one of the smart ones.  Your realtor did influence you in setting a realistic listing price, by not painting Pollyannish expectations, and telling you what the market in fact was.  At the end of the day, you, the seller, made the final decision, with honest input from a good professional realtor, it sounds like.  Unfortunately (as was referenced earlier in this thread), some are neither willing, nor able, to accept the realities of today’s market, and those sellers properties will sit interminably until their listings respectively expire.

It would be much, much easier for buyers to get a sense of the house values if Montana was disclosure state.  This is really the crux of the problem.  It means realtors have a corner on all meaningful information. 

Without sales price disclosure, the only way for buyers to tell what’s going on is to look at state property tax reappraisals.  According to the 2009 reappraisal, house values went up MUCH less than sellers are asking.  For example, in Missoula County, prices rose just 60% from Jan 2002 to July 2008, compared to the 100-150% increases you see again and again in asking prices. 

You can see a county-by-county breakdown of changes in property values by going to the “key statistics” page of the 2009 property reappraisal section of the MT Dept of Revenue website, http://mt.gov/revenue/forindividuals/property/reappraisal/statistics.asp

Since the end-date of the reappraisal is July 08, and since values have fallen since then according to both the realtors’ median price data and the FHFA data for price changes on the same house over time, sellers should be ready for buyers to come in with offers of less than 60% increase since 2002.

You can see the FHFA data at http://www.fhfa.gov/  According to them, house prices in Montana fall 2% from July 1, 2008 to March 31, 2009.  Second quarter numbers will be out soon.

Good grief.  Sorry for all the typos in that last post.