April 5, 2010

Ocracoke Real Estate:  The Grieving Process


The five stages of loss are denial, then bargaining, sadness and regret, resentment and frustration, and, finally, acceptance and resignation.

I can hear you wondering why I would be bringing up the stages of loss when I customarily write about real estate. The answer is that I am coming to the conclusion that these five stages are applicable to our current market and the players involved.

You might think that buying and selling real estate falls strictly in the category of “business.” If you stop to think about it, all business is about relationships. Successful businesses are ones which have formed good working relationships with customers. People buy and sell houses, therefore the human element comes into play.

The human factor plays a much bigger role than you might expect in real estate. There are lots of examples. People don’t buy houses based on the numbers or the details. The purchase is based on their emotional response to the house. The numbers merely support the decision. When advising a buyer about a contract price, I have heard myself saying that the offer should not be so low as to offend the seller. The strategy is to find a middle ground that keeps each party at the table -- negotiating rather than walking away. In successful contract negotiations, everyone needs to feel the win-win. This sounds more like what you would expect out of a psychology class than a business deal.

We’ve had two years now during which the real estate market has been moving into and through this recession. Sellers, myself included, have for the most part been hard-headed when it comes to the discussion of value for their property.

It might have been the spring of 2008 when I had a seller call me and tell me that he wanted to sell his house fast because he had another house, closer to home, that he wanted to buy. At that point in time a small house like his would have sold conservatively for $450,000 to $475,000. I told him that if he went in with a price of $425,000 and expected to close somewhere between $400,000-$425,000, he could attract some attention and possibly meet his deadline. The couple’s decision was to stay with the current market value of $495,000. After sitting on the market for a year, and with no sale in sight, the house was taken off the market. As it stands now, that house might be lucky to sell for $300,000-$375,000.

The option to sell below market value and move on was lost. The hardest part is that the below market value then was more than market value now.

Denial: the refusal to face unpleasant facts. How many sellers would be further down the road had they not held on to the belief that property values were static?

Bargaining: Ocracoke has seen property values escalating at a rate of 10-14 percent per year. We all know that the island is special,  and anyway my house has an incredible view of the water.

I am going to lump the next two stages of loss together. I keep wondering why our sellers are holding onto their listing prices despite our advice. I think that there is incredible sadness, resentment, anger, and frustration at having missed the wave. The energy in the market slipped past us as we bobbed, waiting for the perfect sale. There must be another good wave out there, as we scan the horizon. I’m starting to see now that it’s low tide and the wind is dying out.

I believe that when presented with a concrete offer, a seller will finally accept the condition of the market and move on. A potential buyer recently was more than disappointed by the lack of “price reduction” in our market. Maybe this is because we are a second, and not a primary, home market. But I explained that I thought our sellers were holding onto the hope of a higher value, and that the old “bird in the hand is worth two in the bush” would be the motivating factor for many.

Let’s breathe, accept were we are, and move on.

(B.J. Oelschlegel has lived on Ocracoke Island for more than 30 years and has worked in the real estate business for 26 years.  She is a broker with Ocracoke’s Lightship Realty and a real estate columnist for The Ocracoke Observer. You can reach her by e-mail at [email protected])

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