Aaaaaaargh! It happens every time. Every time a newspaper prints an article or television reports a story about the time to buy is NOW, because the market is IN THE TOILET and sellers are SCARED and can’t compete with new builders and their DRASTIC DISCOUNTS, I am invariably called upon to write an offer significantly below asking price. Here’s what’s frustrating:
Our market is not in the toilet. Our market is healthy. We never experienced a bubble that by economic necessity needed to be popped (corrected). We’ve had steady growth over the past few years. Incremental increases have been the norm. But because some markets are experiencing a downturn, buyers assume everyone is, and therefore it’s okay to offer less. In fact, if they don’t offer less, they will miss the spectacular chance to have a story to tell their grandchildren (“I remember in the real estate glut of ’07, I bought this estate for 10% less than asking price. I saw an opportunity to negotiate, and I took it!”).
Here are just a couple problems with that way of thinking…
1) the sellers are now reading the same articles and are jumping on any offer that comes their way. No, no, no! Houses should be sold for the amount the market dictates. But when you get the media manipulating the market, that’s bad news.
Real estate is local. USA Today is national. CNN and Fox are national. Mr. and Mrs. Smith’s house is local. You can’t take the information of the nation and apply it to your neighborhood. The market is not designed for that.
Nordstrom department stores began in the Northwest. Their first forays into other states began dismally. Why? The decor that absolutely worked in rainy Seattle, failed in sunny Southern California.
What’s the old theater maxim, “But will it play in Peoria?” Just because the New York City environment (both the literal physical environment and the cultural, intellectual and moral environment) approves of it, it doesn’t always work in every hamlet of the nation.
Look at fashion, too. I’m sorry, but anyone who wears those skinny jeans when their body is not similarly skinny, looks ridiculous. Just because someone else ‘looks great’ and something is ‘all the rage on the runway’ doesn’t mean the average American should buy it.
2) the buyer misses the opportunity to buy the house of his or her dreams because they THINK it should cost less. Maybe they go down the block and find a desperate seller and DO pay want they think they should, but that doesn’t change the fact that they’re telling the story to the grandkids in the wrong house!
3) agents with negative attitudes hear this stuff, too and think, “Hmmm, we really must be going down the tubes. I better get out of this business” Wait. That’s not a problem after all. But until they do get out of the business, they’re telling buyers to ‘offer low’ and the sellers to ‘sell low’, and that’s not good representation.
I am not a Pollyanna. I have no misconceptions about this being a magical market where the sun always shines and home values never decrease. I do believe in the strength of the Tri-Cities economy and I am blessed to have a brokerage behind me that does, too. I know that over the last 10 years, our prices have steadily increased, and ours will not drop all of a sudden because people on both coasts are crying out in despair due to the poor state of their markets.
Remember, your market is your market. It is as individual as the people who live there, the jobs they work and the homes in which they live. Be informed, but take all mass media in with a grain of salt.
Very well said! Markets are indeed local and it is frustrating to have to explain that to clients, buyers and sellers, at every turn. Here in the Pocono Mountains of Pennsylvania, I am in the same boat. What I hate most is the ‘yeah right’ looks I get much of the time!!
I get the same looks, Lisa! It’s great to have an enducated buyer and/or seller, but when they’re informed with incorrect info, it feels like a true beating-your-head-against-the-wall moment!