Wisconsin Mortgage Borrowers Make Reduced Offers to Sellers
The calendar says 2007. Wisconsin home prices say it’s still 2006.
Iron-willed Wisconsin mortgage hunters are keeping housing costs contained, by walking out on deals, if necessary.
“If your house was worth $300,000 last year, that’s probably what it’s worth today. But buyers may come in with a $280,000 to $285,000 offer. I tell sellers, ‘If that happens, you need to find a way to make the deal work because there’s an awful lot of inventory out there. The buyer will just go find another house,’ ” Dave Schmidt Jr., chairman of Greater Milwaukee Association of Realtors, said Friday.
Buyers in the four-county area are awash in choices, Metro Multiple Listing Service figures show. More than 14,000 properties hit the market in this year’s four months - nearly three times the 4,989 recorded sales.
April, typically a banner sales month, produced just one sale more than March - 1,493 - as 4,014 newly listed properties joined unsold inventory in Waukesha, Washington, Ozaukee and the Milwaukee housing market.
“Every deal now is a challenge,” lamented Schmidt, who runs Dave Schmidt Realty. “It’s not always price that’s the issue. It’s other things, like date of closing, condition of property - every little thing. The other day, one lady walked away from a deal even though the seller agreed to put a new roof on. It was, ‘I don’t want to deal with it.’ ”
Joseph A. Horning, president of Brookfield-based Shorewest Realtors, agreed.
“Every home has competition these days. Needing a fresh coat of paint might seem like an easy thing to the seller, but a buyer doesn’t need to deal with it, and won’t,” Horning said.
As of April 30, metro Milwaukee’s supply of newly listed properties for sale was 7.9% higher than a year earlier, as demand sank 8.6% lower, MLS records show. Home shoppers keep pushing their market advantage on one main front: price, said Tammy Maddente, executive vice president of Wisconsin-based First Weber Group.
“We’ve had a year of the media saying that the real estate market is tanking. Prices have corrected. The markdowns have been taken (and) it’s probably a fair assessment that we’re at 2005 levels. But buyers’ offers are still coming in way under asking,” Maddente said.
Lowball offers, typically defined as 10% or more below asking price, have lost their historic status as a deal-stopping insult.
“You have to start somewhere,” reasoned Horning. “[Mortgage loan borrowers] are always looking to keep prices down. Because of such large inventory, they’re having success these days.”
Private market data show prices have been erratic this year but remain near 2006 levels, Horning said. Dan Buttery, president of Argus Investments Inc., which runs a Milwaukee-based real estate listing service called Inspected Homes for Sale, said that 90% of listings reflect price cuts.
“It’s a common strategy to set the price so there’s negotiating room. But it’s a buyers market, so there’s lots more negotiating. I don’t know anybody who’s not feeling the strain - sellers, Realtors or lenders,” Buttery said.
Bargain hunters are walking out on deals these days, but increasingly, so are sellers, real estate agents say.
“Sellers who have lowered their price, made their home attractive and already waited awhile are deciding they’ll just wait some more,” Maddente said. “Inventory is still pretty high, but this, too, will pass.”
Mark A. Rutkowski, operating manager of R&R Family Properties in Wauwatosa, counts himself among those awaiting better times. An investor, he’s got six properties up for sale, none with a decent offer in sight.
“People would say things like, ‘I don’t like hydronic heating,’ or “It’s a corner lot. I’ll have to snow-blow all that extra sidewalk.’ All these complaints, but no offers,” Rutkowski said. “My wife and I will probably end up holding the properties longer than we planned, being landlords, offering a lease with option to buy. At least we’ll have income flow.”
SOURCE: The Milwaukee Journal-Sentinel