The "Samson Realty" glossy newsletter shows up in my mailbox once a month. Danny Samson, President, writes a market report inside the front cover. The report I read back in November was so startling, I decided to keep following his reports to see if his advice would change. There does seem to be a bit more pessimism in the newest report. As for the advice last autumn, well, it's fine if you're the type of person who can handle the hassles of being a landlord and burning cash at 1-2 grand a month (plus repairs), while at the same time patiently holding out hope for a new housing bubble to form.
Here's a portion of the advice he gave in November, 2006:
Every case is different, but for example, if you could rent your current home at a negative cash flow of $1000 - $2000 per month (tax deductible) and wait a year or so until the market comes back, that would be very advantageous. It certainly beats having to cut your price by $100,000 or more in the current market conditions. I would pull cash from the equity on my current home to put down on the home I’m looking to buy, or do a low money down loan on the home I am buying. This way I’m buying a $1,000,000 home for $850,000. I might even pull out a little more equity to help with the negative cash flow.
My top agents are telling me that the market is still good. I was hoping for a little more momentum after four good months, as we are now entering the spring market.
The weather and the calendar could have played a role; our hit counts on all web sites have dropped off dramatically. The only good weekend was Easter weekend. . . . If you try to start off in the market priced high to test the market, I think you are making a big mistake. You are going to get the most showings and your best contract early on. By taking the "We can always come down" approach, you will not receive an early contract. You will end up staying on the market longer, eventually come down in price, and end up settling for less than what you could have gotten had you priced it right in the first place. If you have had twenty or more Buyers come through your home without a good contract, THERE IS ONLY ONE PROBLEM, PRICE! I'm sorry to have to put it to you this way, but this rule holds true in any market.