Paul Cooper is being "realistic" with the Baltimore Sun.
Baltimore Sun photo by Algerina Perna
Real estate auctioneers coax buyers to pay more. These days, Paul R. Cooper also urges sellers to accept less.
Cooper, a vice president at Alex Cooper Auctioneers in Towson, one of the biggest operations of its kind in the state, says many homeowners still have inflated ideas of what their property is worth, despite four years of mostly bad news about the housing market.
Cooper, who joined his family's business 30 years ago after training as an accountant, sells everything from rowhouses to restaurants. He's a common sight at Baltimore auctions, and he also sells homes as real estate agents do - by listing them for sale and holding open houses.
He talked to The Baltimore Sun recently about the Baltimore-area housing market and what he tells people who complain that they'd be giving away their property at today's prices.
Question: So sellers don't have a handle on what their homes are worth. Why?
Answer: It's sort of this analogy: If I had not looked at the stock market prices for the past six months ... do I really know what my stock is worth? No. You need to look at current data to know what it's worth. ... You need to beat out the rest of the marketplace in pricing your home.
Q: Does that mean we're in a race to the bottom?
A: It's just being realistic. Who knows where the bottom is? ... I think prices will still be coming down, but not as quickly, and I think you're going to see accelerating volume. As long as there are 16,000 active [for-sale] listings in our area, I don't see any pressure to push prices higher. When we were at the height of the market back in 2005 ... active listings were at a little over 6,000.
Q: Why do you expect prices will keep falling?
A: We wouldn't have 16,000 active listings if we were back to where we should be. February 2002 average sold price: $161,600. Median sold price: $131,900. ... So considering the fact that we're sitting here right now at $271,000 for an average and $230,000 for a median shows we're well above these numbers. A 68 percent increase in eight years in average sale prices.
Q: How are buyers reacting?
A: They're making offers, and generally the offers are about 10 percent below the asking prices. That's been the average. If you go back, traditionally it only used to be about 5 percent under asking prices.
Q: What's the difference between prospective home buyers today and at the peak in 2005 and early 2006?
Q: Has the population of interested buyers fallen as far as sales numbers would suggest?
A: I think there's a lot of interested buyers, but they're all looking for a good deal. ... At my open houses, I have an excellent number of prospective purchasers. So there are a lot of people looking for something that's affordable and reasonably priced.
Q: Why aren't more homes selling, then?
A: They're overpriced. Plain and simple. Each marketplace, you can really dissect it.
Q: Such as?
A: I spoke to a gentleman in northwest Baltimore County near the Baltimore-Carroll County line [who was looking to sell]. ... In the $350,000 to $700,000 price range, people are moving closer to maybe Westminster, Owings Mills, closer to urban centers, which is more convenient for shopping, employment. If I have $400,000 to spend, I may not need to be in that area.
Q: How often are sellers overpricing because they're trying to get enough to pay off their mortgages?
A: That's a major problem. I can't tell you how many phone calls I have from people who tell me how much they owe on ... [property purchased] in the past five years, and I tell them, "I'm sorry, you're underwater. And unless you're prepared to write a check at settlement, there's nothing I can do."
Q: Is anyone pulling out the checkbook?
A: No. Those are the people who say, "I don't want to give it away." Quote-unquote. I say, "You're not giving it away. It's just the marketplace." If I pay $40 a share for a stock, and it's now $20 a share, is $20 giving it away? No. The market is $20. Hopefully, [real estate] is going to go up. Not in the near future, not with 16,000 active listings. So I can either hold on or sell right now, take my losses and lick my wounds.
Q: What's happening at foreclosure auctions these days?
A: Banks are discounting the properties tremendously. Banks do not want to own real estate; they really do not. So they're anxious to discount it in order to bring about a result at sale time, or if they have to buy it back, they're anxious to discount it and get it sold after they take title to the property. ... That has a negative effect in many neighborhoods.
Q: What drives you up a wall in your job?
A: You try to educate people about the marketplace, and those who are in denial frankly can be frustrating. I know the market, I know how to analyze it, I have the data. When someone tells me, "No, I don't believe it," I say, "Well, what data do you have?"
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