Tuesday, January 27, 2009

"I'D GLADLY PAY YOU TUESDAY FOR A...."

A young couple attended an open house I was hosting recently and they handed me an offer they had prepared for the purchase of the home. Their offer was substantially lower than the fair market value of this beautiful property (tantamount to offering the price of a hamburger at a fast food drive through in order to purchase a complete filet mignon dinner at the Ritz) and they wanted me to know how they arrived at the figure.

In support of their market analysis, they had downloaded material from one of the many internet sites that have exploded through cyberspace with real estate public data strewn in all directions for the "convenience" of the general public to explore and interpret as factual.

They pointed to columns of figures and addresses of properties that had been on the market and that had sold. They took the original list prices of the homes and subtracted that figure from the actual sale prices of the homes and they used that same computation to arrive at the hamburger price they intended for the purchase of the filet mignon.

It does not work that way. As long as a home is overpriced, it will sit until it grows cold or until it is reduced to what is the fair market price for that home. There are columns of overpriced homes still on the market. Allhomes on the market are in the "column" we can refer to as "the wish list". That original "wish" to realize more equity than the market will bear, will never materialize. Homes that have been correctly priced for the market will beat the closing table within a predictable and reasonable period of time. Homes that have sold are the market and they are the only homes that should be used to compare with the value of any other home.

The records we REALTORS track in the market demonstrate that properties are being priced more realistically and as such, they are coming to closing sooner. The buyers are back.

The young couple with the unrealistic offer is not alone. There are many buyers who continue to approach properties that are far out of their price range and they are often armed with the false notion that "all sellers are desperate". We who practice real estate and really love what we do as REALTORS, recognize that although there are some circumstances where a buyer may come upon a "steal", it is the exception and not the rule. These ill informed buyers appear surprised when the sellers, whose properties have been priced correctly, reject their offers.

The market in which we are working today is in every way a normal market. The frenzy of the sellers' market has run though its normal cycle and has come full circle through the buyers' market to where we are today....experiencing normalization and stability.

Buyers and sellers need each other. In fact, they become each other often and in doing so they can appreciate how it feels to be each other. It is often the case that we REALTORS work with both buyers and sellers, so we understand the perspective of both at any given time. If we take a step back and take a look at the whole picture, it comes down to doing what's best for our families and our selves with such an enormous undertaking as the purchase or sale of our largest asset.

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