this time in reference to 163 Kendall Camp Circle, McHenry, MD.
March 07, 2008: "very competitively priced" at $899,900.
Final selling price: $725,000. Maybe the new owners read about this property on this blog and learned something that helped them in the negotiations. One only wonders.
At least he didn't say prices were going up in 6 months or that it was a good time to buy but when "competitively priced" is nearly $175,000 above selling price you really have to wonder what criteria were used in determining this price or that it was "competitive". What I'm really getting at here is how do these agents determine "value" or the right price so that they can say one price is competitive and another is not? In the one post I linked yesterday the agent said there were properties selling below "value" in January 2008 (so presumably there should be a lot more of them now)? How does he know though? Is it all based on previous selling prices or are there real valuation metrics they use? Or are they confusing "price" and "value" like I previously confused "perspective" and "prospective"?
Of note for prospective buyers, there are at least three other properties for sale in this same development ranging in price from $839,900 to $969,900 which have been on the market for an average of 480 days with essentially no price reductions. As noted by one of my readers there is an additional Kendall Camp property on the market for $777,000. Maybe he's the listing agent and wants to call more attention to his listing since it is listed by a broker that doesn't show up on Redfin and I can't tell how long it's been on the market or how many price changes it has gone through since it was built in 2006. The same reader also pointed out that another Kendall Camp property (123 Kendall Camp) recently closed at $940,000 (or about $20,000 below what the agent-owner had purchased the property for in 2006). So each sold Kendall Camp property referenced here was sold by DC Development LLC at WISP Resort to an individual who later resold the property at a loss. It turns out the 93 Brenneman Lane property which is headed for a huge loss was also a DC Development LLC property. My reader was right, I really should dig into this some more.
I'll reiterate one of my previous comments on this as well, if it's a great time to buy why are agent-owners selling at a loss right now? Shouldn't they be holding on to these investments that they are saying are going to rebound in price instead of making cut-rate sales where they are guaranteed to lose money? Why not wait it out for the rebound and sell for a big gain? No one has really given a good answer to that one yet, but I am waiting. I should also point out that this most recently sold property was originally listed for $999,000, so clearly there continues to be a precedent of properties selling well below list in Kendall Camp.
In fact, price reductions of these magnitudes can save buyers more than those slight changes in interest rates some people like to talk about when citing the reasons to "buy now". An example:
$800,000 30-yr mortgage at 7.0% = $5,322.42/month
$800,000 30-yr mortgage at 6.0% = $4,796.40/month
$700,000 30-yr mortgage at 7.0% = $4,657.12/month
All according to this simple mortgage calculator. Now which one would you prefer: paying $100,000 more or 1% more on the interest rate? Turns out paying the higher rate is cheaper per month but more importantly you have LESS debt so if in 5 or 10 years you sell the property you have $100,000 more in equity than if you would have paid more at the lower rate. A famous investor once said that he makes his money when he buys not when he sells, so as I have said before the real opportunities come from lower purchase prices not lower interest rates.
And finally, just for the record and to follow up on the first comment to this posting, I too have hinted to potential buyers that there may be good deals to be had in the Deep Creek market going back to early and middle part of last year and subsequently updating my thoughts periodically with comments on short sales, inventories, etc. However, you will notice that I simply offered my thoughts without adding the obligatory "buy now" or "prices will go back this summer" or "the equity gain from buying now will pay for your child's education in 5 years" or "the market is well and improving daily" when it really wasn't, etc. In my mind that is the difference between (1) presenting your argument and (2) being misleading or just simply giving really bad advice.
Don't forget to check back to Dan's Deep Creek Blog for future updates.
Tuesday, January 13, 2009
Update on misleading statements from Deep Creek real estate agents ..
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5 comments:
If you are worried about real estate agents misleading people try not doing it yourself.
The lowest priced unit at Kendall Camp is currently being offered at $777,000 not $839,900. And it’s been that way for several months.
You may also want to do some more research on Redfin and report in your blog that a Kendall Camp unit recently transferred just a few weeks ago in December 2008 for $940,000. It was on the market for 61 days. Apparently it turned out to be a great time to buy for the people who bought the Kendall Camp unit you reference earlier this year for $725,000. The value of their unit just went up $215,000 in less than 6 months!! Maybe those agents saying “buy now” aren’t so misleading after all but instead are trying to convince the public there might be some good deals out there?
And for the record…its “prospective” buyers….not “perspective” buyers. I remember reading one of your earlier posts chastising a real estate agent for all the grammatical, typographical, and spelling errors they had on their website. This seems a tad bit hypocritical to me.
I've said before that I make plenty of typos myself and you're right I certainly missed that one. Most of my previous comments, however, were in regard in longstanding errors as if editing of professional websites was considered optional. I believe you would see that if you went back to read my previous comments. Thank you for pointing out my error nonetheless.
Redfin did not (and still does not) show a $777,000 listing in Kendall Camp and I did not previously take the time to search other sites which is why I said there were at least three different listings. I will update the posting though. Thank you for the additional information.
So you're trying to tell me that because the selling price of a nearby property was $940,000 that the "value" of another property (regardless of square footage and amenities) suddenly goes from $725,000 to $940,000 (e.g. "The value of their unit just went up $215,000 in 6 months!!"). That is one of the funniest things I've read yet and as I have said before everyone who believes that needs to learn the difference between price and value. When someone says a property is "competitively priced" at one number and then sells it for 80% of that number they either didn't know what they were talking about in the first place or were using a sales pitch to mislead people. There's really no other way to spin it.
And those agents you mention always say "buy now" and have been trying to convince people there were good deals for over a year now, all while prices declined further. I can understand that at some point what they say might be true but why would I trust anything they say when their "valuations" are only based on what selling prices were a month or a year ago.
Thank you!
Your response “Redfin did not (and still does not) show a $777,000 listing in Kendall Camp and I did not previously take the time to search other sites which is why I said there were at least three different listings.” finally admits the truth. Five minutes on google, or in this case redfin, doesn’t make you an expert.
The information I gave was correct albeit not as complete as you would have liked. The three properties are listed in the range I gave and for the average time I gave, it just turns out there is another one which I knew was a possibility. If that is your biggest complaint with my post and what disqualifies me from being an expert what can I really say to that? I was not trying to be an expert only presenting what I saw in this case (that real estate agents got it wrong as it related to the competitiveness of the initial pricing of 163 Kendall Camp and that there were other properties in the development on the market which have been listed for quite some time without notable price cuts). You are correct though I should have noted the source of the information so as to avoid any confusion. Maybe soon Redfin will have data from all the local brokers which would make it an even more powerful resource for people to figure out the truth for themself. As it is one data set is hidden behind closed doors while all the others are out there for everyone to see. This could be unique to the Deep Creek market since Redfin does not (yet) serve this area or because some of the brokers only serve this area. Time will tell.
My question now is where are these experts you speak of? Surely they aren't the real estate agents who have given more than their share of bad advice over the past year? I guess a couple weeks in real estate classes doesn't make you anymore of an expert than Redfin or Google now does it?
I encourage you to reread the entire posting since I edited it after your first comment.
Now that there is a short sale in the community listed at $534,900 I suppose this anonymous real estate agent also would suggest the value of the house purchased for $940,000 has fallen by more than $400,000 in the last 30 months!!! What a "great" time to buy!? In fact, that buyer and this agent's timing really couldn't have been much worse.
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