The Pitfalls of Overpricing

The best indicator of what your property is worth is an examination of recent comparable sales. Your Seller’s Agent can provide you with a CMA, a comparative market analysis, which outlines these sales and estimates the value of your property. Try to remain unemotional when you review this information. You may be thinking of how nicely you re-tiled the bathroom or how much better the kitchen looks since you re-modeled, and because of your efforts, you feel your property is “better” than the comps, and therefore worth more. It can be very difficult to depersonalize the process of pricing, but it is the key to success.

The “sweet spot” for marketing a property is the first 30 days. The greatest number of showings typically occur during this period. This is when the property first appears in advertisements and on real estate websites. Buyers closely monitoring the market will become aware of your property and take immediate notice of the new offering. Excitement is generated by the new listing. Buyer’s Agents will be previewing the property for their clients. BUT, only if it’s priced right.

When a property is not priced properly, you essentially forego the benefits of the first 30 days. Buyer’s Agents will overlook the listing as being unrealistic and will not bother to alert their clients about the property. Realtors know their market, and why waste time with a property that is overpriced? Buyers conducting their own searches will compare the house to others like it, and will dismiss it. With the current market conditions, it is very risky to price your property higher than it’s worth. With increased inventories, there are too many other choices.

You may be thinking, “I am not desperate, so I will just wait for that one person who loves this house as much as I do and is willing to pay for it.” In most cases, this strategy does not bear out. Remember, most Buyers will be getting an appraisal to satisfy their lenders, and the appraisers use the same comps that your Agent used in the CMA. If the property doesn’t appraise for the asking price, you may find yourself re-negotiating the purchase price.

If you do not need to sell and you require a price higher than the market will support, it is best to wait until the market appreciates. Why relegate your property to becoming stale? When the market finally catches up, buyers will ask “what’s wrong with that property? It’s been on the market for so long.”

If you want results, price the house competitively. Remember, for every month the house doesn’t sell, you will pay carrying costs, and ultimately you must deduct those from any higher price that you may have achieved by waiting an extra year to get your price.

How Low Can It Go?

Price reductions and new listings priced according to current market values continue to generate activity in this slow real estate market. Buyers are now acting to take advantage of opportunity. Some buyers, however, are waiting to see just how low, the sellers will go.

From the buyer’s perspective this strategy could create anxiety. Here’s the risk. If you find a property you like and decide to play the waiting game you could lose out. With interest rates still low and price reductions bringing many properties into reach for more buyers, you may lose that property you had wanted. We’ve seen this lately on the outer cape. A buyer passes on a property in order to play the waiting game. Suddenly, the property sells and the buyer feels dejected having not expected the property to sell. 

Sellers on the other hand are not only reducing their prices, but are offering a buffet of enticements…some are paying condo fees for up to a year, large buyer bonuses and more. But the only thing that really matters is the listing price.

If you are in the market to buy and have identified your dream home on the outer cape, talk to your realtor about making an offer. If you are willing to make a realistic offer, it might surprise you as to what sellers are willing to do to sell their property.

Provincetown's Historic Floaters

Have you ever wondered about the meaning of the blue plaque that is found on many Provincetown houses? Throughout Provincetown, but mostly in the West End, you will find antique homes that bear a blue and white ceramic tile that depicts a house on a boat.

These homes are known as Floaters. They were built beginning in 1818 on the peninsula that we know as Long Point. Many of today’s visitors are not aware that at one time, a settlement existed on Long Point. There was a thriving community, with a Salt Works being the primary industry. The Light House was built in 1826 and there were windmills, a store, a school, boat landings, and a total of 200 people that lived in 38 houses.

When a large salt deposit was found in Syracuse NY, it essentially put the Long Point Salt Works out of business and eventually in the 1850’s, the settlement was abandoned and the families moved to the mainland. Wood was a precious resource at the time, and rather than just leave their homes, the settlers brought their houses with them by floating them over on rafts. They were placed on foundations, and many still stand today.

A Time To Buy

The stars are aligned and conditions are prime to buy real estate. It is beyond textbook perfect...almost. 

Listed prices for condominiums and single family homes are the lowest they have been in years. This is most likely due to sellers now pricing their homes realistically per market performance. Low listed prices combined with the fact that interest rates for 30 year fixed mortgages are now around 5.5%, makes it very clear that something magical is occurring for those who want to buy real estate.

Rarely, have both the listing prices and mortgage rates been simultaneously low.
Historically, even in the early nineties this phenomenon did not occur. The market was only sluggish for roughly four years before the extreme escalation in values started.

If the market starts to rebound one year from now, it could take another three years to see the same levels of appreciation as we did before the recent correction.
Consumers would serve themselves well to pay attention to the signs. Low mortgage rates, low listing prices, multiple foreclosures and short sales. This is indeed the time to make that leap.

But there is a double edged sword. Obtaining a mortgage in today's market is not as easy as it once was and can be downright impossible. The recent mortgage meltdown has put stricter qualifications on potential homebuyers. Although there is tremendous opportunity reflected in low listing prices and foreclosures, not everyone can take advantage. Lenders are no longer giving away money. If you plan on buying a foreclosed property keep in mind that you have to be pre qualified and bring a deposit of up to $5,000 the day of the auction.

So although it is a good time to buy, you have to have clean credit, strong income and a good eye for opportunity.

Financial Benefits of Owning a Second Home

Owning a second home may afford you many of the benefits of primary homeownership, whether it is for your own vacation use or it’s a property that you lease out for income purposes.

If you intend to use the property as your personal getaway, you can deduct your mortgage interest and property taxes. In addition to those savings each year, you will possibly enjoy increased appreciation, and your increased equity in the property will eventually put more money in your pocket. You may also opt to occasionally rent the property out to offset some of your costs.

Although you are not allowed to deduct mortgage interest from a property that is used strictly as a rental property, you can deduct operating expenses up to and exceeding your rental income. You can also deduct any losses when you sell the property.

Before you invest in a second home or income property, speak with your accountant or tax advisor. There are strict rules about personal usage and length of ownership that apply to investment property if you hope to enjoy the maximum tax benefits. Either way, owning a second home can prove to be a smart move in your financial future.

Multi-Part Series on Our Favorite Walking Trails - Part 2: CLAPPS POND

The largest pond in Provincetown is called Clapps Pond and there is a beautiful walking trail that encircles it. The pond and its environs are located off of Route 6 near Shank Painter Road on approximately 47 acres. The area surrounding the pond is a scrub pine forest and because it is more protected, the pines will be taller and you will also see oak and birch trees. Always keep to your left on this trail. As you walk up a slight incline, Clapps Pond will come into view on your left. Keep your eyes open for other kettle ponds on your right. You can leave the world behind as you encounter few others. This is a wonderful place to walk with your dog. You may see exciting wildlife during your walk, including wild turkeys, coyotes, foxes and deer, in addition to abundant bird life.

To return, retrace your steps back to your car. Don’t forget to bring water, especially if you take your dog. During late spring and early summer, pack insect repellent. Don’t forget sunscreen and check for ticks when you return.

If you walk this trail or Hatches Harbor, which we described last week, let us know your impressions. Enjoy.

Directions: You access this trail off Route 6. From town, drive down Shank Painter Road (the Grand Union is on this road) toward Route 6. Take a left on Route 6 toward Herring Cove. Almost immediately you will see the entrance to a fire road on your right. You can park on Route 6 here but take care not to block the fire road entrance.

Multi-Part Series on Our Favorite Walking Trails - Part 1: HATCHES HARBOR

As spring approaches, thoughts turn to the outdoors here on the Outer Cape. Provincetown, Truro, Wellfleet and the National Seashore offer many beautiful walking trails near the ocean and deep into the woods past sparkling kettle ponds. Thanks to President John F. Kennedy, much of our wildlife and natural environment was protected when he signed a law in 1961 authorizing the creation of the Cape Cod National Seashore, which encompasses 43,500 acres and 40 miles of seashore along the Atlantic Ocean.

One of our favorites in the Seashore is the Trail to Hatches Harbor. You access this trail off of Provincelands Road. (Directions Below) The first section is on a level, packed sand trail which takes you through a scrub pine forest. You will notice the trees seem stunted. This is due to the harsh environment of salt spray and high winds especially in the winter. After approximately one half mile the trail opens up to Hatches Harbor tidal marsh. You will now be walking on an earthen dike which splits the marsh in half. Race Point Light and the keeper’s house are in the distance and the dunes of the Provincelands are straight ahead. This area has abundant birdlife and spectacular views. Keep your eyes open for the Great Blue Heron. Walk as far as you like, even out to the Light House. (about 45 minutes each way). If you choose to walk out to the Light House, be mindful of the tides – it is best to go during low tide. Just beyond the Light House, the ocean awaits you for a refreshing swim on a hot day.

(Little known fact: The residence located at Race Point Light, which was built in 1840 and was originally occupied by the light house keeper, is available for overnight stays. It is maintained by a non-profit organization and more information can be found by clicking here)

Directions to Hatches Harbor: From Route 6 near the Conwell stop light, turn right onto Race Point Road. When you see the Seashore Visitor Center on the right, take the next left toward Herring Cove Beach. At the bottom of the hill (less than a mile) you will see a parking lot on your right near the bike trail tunnel. Park in the lot and walk toward the fire road. The trail is well marked.

Next week, we will take you on a walk around one of our favorite Kettle Ponds.