Reader Q&AReader questions:

Q:What is your read on the rental market this season? 

A: Regarding rentals, this season has been as good or better than 2006. It seems that clients still uneasy about buying are renting. That’s actually one of the reasons that homes don’t tend to lose value as quickly or significantly in this market. If it won’t sell, there is a good shot at renting it.

I was looking for a $100k July/Aug rental a few weeks back and had difficulty finding anything suitable. We finally did, but the house was less than ideal for the client.

Rental prices have climbed in the last two years after holding steady for the previous 2-3.  During 01-04 people were buying and many wanted to rent as an income strategy, somewhat flooding the rental market.  There are always tales of woe circulating from landlords who can’t rent their house. Those people tend to have an inflated idea of what their house is worth or décor is less than optimal, or they haven’t gotten the rental info out to all the brokerages.

Q:What are your thoughts on the market as we head into the 2007season?  How would you relate the offered prices as posted on HREO.com to what you think actual transaction prices would be?  In my mind, there seems to be a great deal of variation in price for houses that are not all that dissimilar.

A:Regarding offering vs trade prices, yes, there is a great disparity between prices for what appear to be similar homes. That being said, many locations have unique qualities to them that can impact value.  The same house built next to a reserve can have an increased value from one sandwiched in between other homes.

As the market ebbs and flows, here in the Hamptons, I find that, rather that offering prices lowering, the actual trading prices as a percentage of offering price slides with activity levels. In hotter markets, trades happen at 98-102% of offering.  In softer markets, they typically trade at 92-95% of offering, although these are exceptions on both ends.

Another factor for variations in prices on similar properties is the “marquee” listing or the “I dare you” listing.  Some people are serial listors, always putting their properties on the market 20-25% (or more) above value because it feeds their ego – OR because an agent “bought” the listing with an inflated suggested list price. The “I dare you” listors put houses on the market for their “make me move” price, which in escalating markets is often a moving target. Anyone who’s been
brokering for a while has had instances where a buyer puts in a full-price offer and, suddenly the seller takes the house off the market because they didn’t believe anyone would hit their number. Often, the house then comes back on the market at a new, higher price.

Then, there is always “lightening”. That’s when Mrs. Buyer steps into a home and says “I want it” and Mr. Buyer writes the check – period. It’s that kind of business that keeps us, as brokers, getting up in the cold, dreary mornings and out on the road. Lightening strikes a lot in the
Hamptons.

Do you have questions you’d like answers to?  If I can’t answer them, I’ll find someone who will.

Either put them in the comment section here on this post, or email them to me at md@route27realty.com

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