In general, if you go to the Realty Times site looking for enlightenment and wisdom, you are liable to be disappointed- most of the time it is a source for "It’s merely a flesh wound!" quotes. (It’s a national site where local realtors can post their opinions.) Every now and then though, you run into something worthwhile. There is a Q and A on Realty Times by Peter Miller, which answered this question:
I bought a beach house for $736,000 and put in approximately $30,000 in improvements. The market here is going down, it seems to be actually stopping. With tremendous advertising we finally dropped the asking price from $1.35 million to $999,999. We were just offered $950,000. Am I being greedy to want $960,000?
We already purchased another home in the area just before the real estate drop for $1.7 million and of course I’m kicking myself now because I got ripped off.
Mr. Miller’s answer was to the point:
Are you greedy to reject $950,000? I’ll pass on any personal characterizations, [Mr. Miller has more discretion than some of us!] but in terms of dollars and cents you ought to grab the $950,000.
You have $766,000 in the property. You’re being offered $184,000 more then you paid before taxes and costs. If you reject $950,000 in a slowing market you may not get an equally good offer for months. In fact, you may never get an equally good offer. Meantime, you have various costs to hold the property. To quibble over $10,000 in the context of this situation is not a good strategy.
As to the property purchased for $1.7 million, how were you "ripped off"?
If you’re going to be an investor then you must recognize that risk is part of the game. You did well on one property and you may have a loss on the second if you were to sell today. But why sell today?
Real estate is not a short-term investment. You may need to rent the second property until the market recovers. Of course, there’s no guarantee that the market will recover quickly — or at all.
Toll Brothers, a luxury homebuilder had their conference call yesterday, and reported that their revenue fell 10 percent, and signed contracts were down 55 percent.
"We continue to look for signs that a recovery is imminent, but can’t say yet that one is in sight." Toll Brothers chief executive Robert Toll said in a statement.
Toll Brothers is going to do business assuming that recovery isn’t imminent. Smart home sellers are going to take Mr. Miller’s advice, and make the same assumption.