Home slump reality hard to swallow

From the Record:

Yearning for good old days of 2005

If there’s one thing that home sellers hate to hear, it’s: “Your house is worth less than you think.”

But that’s exactly the message that real estate agents in North Jersey (and nationwide) must deliver in a market where prices have declined from their peaks of 2005.

“We have homeowners who bought two years ago; they’re going to have to sell for less than what they paid,” said Randy Douglass of ERA Douglass Realtors in Montvale. “They get very upset and disappointed. It’s hard to swallow.”

The problem is that many sellers stubbornly cling to the price their neighbors got two years ago.

“Sellers are still stuck in the old days, and they’re not going down [with their asking prices],” said Ivana Crecco of Camelot Realty in Hackensack.

Many, she said, tell her they need to get the higher price because they have to pay off credit card debt. She has to break the bad news that buyers just don’t care about their credit card problems.

“When it sits on the market [at the higher price], they start to blame the real estate agent,” Crecco said.

So how can real estate agents get sellers to accept reality?

“Often we have to show them what the other homeowners are doing,” Douglass said. If the asking price has just been cut on a similar house nearby, some sellers will agree to lower their prices. Douglass also shows the actual selling prices of comparable houses — another reality check for sellers.

Tim King of King Real Estate Agency in Bergenfield said he often reminds sellers that the house they’re buying has probably come down in price, too.

“It’s all relative,” he said. “Even though you’re getting less for this house, you’re paying less for the next house.”

King said he will sometimes spend two hours with clients, showing them all the comparable houses on the market in their town. “It takes a lot of educa-tion,” he said. “You can’t ask $400,000 for a Cape Cod in Bergenfield if the same house next door is on the market for $358,000.”

Buyers are out there, agents agree — but they’re looking for bargains. Homeowners must understand that as the inventory of houses has risen, there’s a lot more competition for buyers’ attention, Douglass said.

“If you have 10 houses in Upper Saddle River that you’re competing with, you have to be the No. 1 or 2 house in your price range,” Douglass said.

Douglass said the sellers in the most pain are those who bought in 2005. They may have to take a loss of as much as 10 percent, he estimated.