(Part 2) Response to Ann's Comment About Realtors in Reno Not Knowing Any Better
So when the time came that I was getting approved and I was seeing the opportunities that 2005 presented to me I was excited and wanted to move fast.
Ian and I made a friend named Dan Wyatt. A man who was totally an odd
ball for me, he always had a book with him, does not want to drink a
bottled water(preaching that it wasn't really purified the way the
companies presented it) and was telling us to not get RID of the Red
Rock home in Reno Stead and sell the other homes that we had under our
belt because the 'Bubble is going to burst!' not based on his opinions
but based on the
market.- The Top
Confirming the blog that Robert K. was talking about.('Booms and Bust') Ian and I (like with everything else) were discussing and arguing about the move of purchasing the property at Red Rock(North Reno) and Somerset(located in Northwest Reno. I reserved two homes there that were going to be built in 2006 and 2008) My plan was to sell the other two investments (Northwest Reno and Spanish Springs, Sparks) and get the two homes in Somerset plus continue with the purchase of the new home Red Rock, North of Reno (the one I won through raffle)
To make a long story short (If I don't cut the story short I will be talking to you as far as our trip we made to Boise Idaho to invest in, you guessed it REAL ESTATE.) I argued my way in to purchasing the Red Rock property and keep the reservation in one of the Somerset homes(I finally dropped the other one) because I wanted to get a house that can accommodate the whole family, plus I was finally getting a house in my own name (The other two, Northwest and Spanish springs were under my partners name) and I was looking at the comparable homes and by the end of November (which was the closing on this property) I was again 'up' by tens of thousands of dollars. I bought it ,signed the papers with a smile and I won the argument with Ian and I was going to prove him wrong when I do sell this property with profit.
I remember this line from Ian 'you can argue with me but you cannot argue with the stats':The Top Needless to say now,'BOY WAS I WRONG!' and I have been paying for it ever since. Early 2006 I withdrew my reservation in Somersett and I placed the other properties in the market. I made a little bit with the Northwest home but not what I projected it to be the first time when I bought it and lost money with the Spanish Springs home. I was living in my Two Story, 2130 square feet, 4 bedroom 2 and a half bath home in Red Rock which I bought for $322,000 and is now $290,000. So now I say to Ian,'I told you those COMPS were wrong!'
So you see Ann, I was looking at everything else that was really irrelevant about investing and was also fooled by the 'Comparable Market Analysis' prices from the MLS that I ignored. I wish I was this open now and not so stubborn and greedy then, but what don't kill us only makes us stronger. I wish I read that blog that Ann read... but then again I might have still made the same mistake.
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I think the biggest mistake the average investor seems to make is they look at listed comps and think that those numbers are current. Just because a price is being asked doesn't mean it's the correct price to sell.
I think you have to determine weather the market is on the rise or fall and then price ahead accordingly. I talked a co-worker out of buying one of those Centex Homes in Stead in early 05' based on this. I told her I thought the market was flat or on the slide already based on seeing pending listings decrease. I showed her some comps that were less than what she was about to pay for the Stead home. I said if those weren't selling for less I couldn't see why the new house could sell for more.
I'm not saying that I can see the future otherwise I'd be rich but I do believe that the market will tell us some things if we listen.
I appreciate your openness about your experience. I've been putting off commenting on this post because I was trying to think of something positive to say. It's hard to be positive because all I am thinking is "what a painful lesson!"
Until hearing your side, I assumed that all real estate agents used the MLS every day while doing their jobs and couldn't help but notice the number of listings rising almost every day. And I assumed realtors were talking among themselves about it. After all, I was looking for another home off and on then, and I noticed the number that popped up was bigger every day. But I believe you when you say other things distracted you. I understand that what you wanted blocked out reality.
However, I bet the home builders you were dealing with were aware of slowing sales and rising inventories. I know they were keeping quiet about them.
BTW, I don't have a good sense of current home values, but I agree that your listing in Somersett is beautiful.
Perry,
"think the biggest mistake the average investor seems to make is they look at listed comps and think that those numbers are current. Just because a price is being asked doesn't mean it's the correct price to sell."
You'll be surprised Perry that even experienced Realtors fall in this trap. Coz' it feels good to show the 'possible'
profit to your prospective buyers-makes them excited.
It's funny that you mentioned that " I think you have to determine whether the market is on the rise or fall and then price ahead accordingly." SOO many people lose literally Tens Of Thousands of dollars (I've seen it happen to at least two of my clients) because they were hoping when they should be fearing the market. They didn't push hard enough to sell their homes hoping that next year would be better. It pains my heart.
Perry, all I can say about your advice to your co-worker dissuading her to buy the Centex Home is I Wish I Was your Friend Back Then. Seriously.
Yep. The market indeed will tell us some things if we listen.
Ann,
Empathy appreciated. It is a painful lesson. I was just talking to Ian yesterday about the lesson I've been learning
through this Home At Stead (my last reminder of my foolishness) But Ian also told me that he thinks it may be very well worth it. (not just because of the Ra Ra Go Think Positive mentality but even more than that) You know if your losing some baseball games better lose it early in the ballgame rather than in October in the world series- perfect analogy for what happened to me.
"I assumed that all real estate agents used the MLS every day while doing their jobs and couldn't help but notice the number of listings rising almost every day."
It's an honest mistake on the part of consumers and the general population that because your the so called 'expert' that you are THE expert. Nothing could be farther from the truth. Whether in investing in stock ( remember the 'experts' that were invited to speak to mainstream news in midst of the Tech Bubble of early 2000 advising the people to hold on to their stock that it was just experiencing Hiccups- 80 million people lost money on that bubble burst ) or real estate. It's hard to be objective when the mortgage of your home depends on the health of your industry. I've met a lot of people in the real estate industry (many have plus 5 years experience) and I'd be lucky if I can name 5 people who really know what's going on who does his/her research. And the funny part is the average person often times can be in a better position to judge the market just because they are more objective (if they choose to be). Take for example
your observation of "After all, I was looking for another home off and on then, and I noticed the number that popped up was bigger every day. " that's a great question to ask the market, 'why is the home inventory going up?'
or Perry's comment (the guy who just made a comment in this post)
"I told her I thought the market was flat or on the slide already based on seeing pending listings decrease. I showed her some comps that were less than what she was about to pay for the Stead home. I said if those weren't selling for less I couldn't see why the new house could sell for more."
Listen to the market. Let's forget our biases towards the market. Ask questions.
I've had my own painful experiences--I was one of the losers when the tech bubble burst!
Oh boy, I'm sorry