Mistake in Mount Lawley

Channel 10 News Monday 6th June the featured a couple {Danielle & Kevin Griffiths} trying to sell their home with little success.

At first you would feel sorry for them with their tale of financial hardship with bills mounting & Danielle the wife now being on maternity leave, they only have one income to pay the bills.

But stick with the story to the end & see if you still have sympathy for them.

 

http://www.realestate.com.au/property-house-wa-mount+lawley-107134717

37 Fifth Avenue, Mount Lawley, WA 6050  

Offers from $1,245,000 

(Current Listed Price June 2011)

This house was bought be Danielle & Kevin in March 2009 for $710,000.

They have spent approx $200K renovating & extending the house so with stamp duty & selling costs the house would owe them approx $1 million & 2 years of sweat & tears.

So naturally Danielle & Kevin would expect to make some sort of profit for their hard work & efforts?

Of course they do and accordingly they first listed their house for sale early January 2011 @ $1.395 million to $1.495 Million !!! (Code for $1,450,000)

Where did they come up with this number? Well the house next door @ #39 sold for $1.55 million (However this is a substantially better character home) 

Since listing Danielle & Kevin have steadily reduced their price as buyers are not buying. Feb 2011 Down to $1.345 Mil, Mar 2011 down to $1.295 mil & Apr 2011 down to $1.245 mil where it is still on the market today a stale listing 6 months old.

If only greed did not take over in January 2011 when the first listed. They should have listed at a more realistic price of around $1,150,000 but "Greed Is Good"

Unfortunately for Danielle & Kevin The West Australian  had a article in today's paper forecasting property prices to fall a further 8% on today's price & that prices will remain flat till at least the end of 2013!! 

Danielle & Kevin are in a "Catch 22" when they bought in 2009 interest rates were under 5% in fact there were starter rates around 4.65%, but today with a interest rate around 7% plus & now only one income to support the mortgage they have to decide if they can wait for the market to turn around. (Remember not till the end of 2013 is the forecast) 

Interest rates are forecast to rise sometime this year putting further downward pressure on property prices. But like all property speculators Danielle & Kevin will persist & hold out for their price that is just not there in today's market.

Danielle & Kevin could learn from #9A Fifth Ave it listed in Dec 2010 for $1.1 mil but sold for $980K in March. Although this is a Duplex house it is freestanding & a substantially better home than theirs. {Interestingly this house is available to Rent @ $850pw or $44K PA a yield of less than 2.5% after Rates / Maint Etc what a DUD Investment}

Or Danielle & Kevin could look at #38 that sold for $960K in Jan this year a very average house but it sat on a 867 M2 Duplex / Triplex Block substantially larger than their 540 M2 plot!! 

I see this fixation with price all the time. these Vendors will hold out for that elusive buyer whilst the market turns on them. Already today The West shaved a further 8% off their price. I expect to see this house still on the market in August unsold.