We are in a very interesting time in the market right now. More specifically we’re referring to the mindset of adjustment phase. This is the process of buyers and sellers adjusting their mindset and beliefs to what the new market is like.
We saw this when the market tanked downwards and sellers were reluctant to believe, thinking it was a hiccup, and then it continued until somewhat recently. The process is now in reverse, after so long of negative market talk amongst friends, realtors, peers and the media, it’s now shifted and buyers are struggling to come around to this fact.
Now this happens on different levels, we have those who are kind of aware and will come to terms with the new reality after a month or two, then you have those who need to experience the change first hand a few times (usually losing out on multiple offers or something) and then it hits home, and then finally, you have the outright ‘naysayers’ who refuse to believe the news.
This in my opinion, is much tougher for the buyers to adjust to. In reality, if home prices drop and you are not going to achieve your desired number, you have options of waiting till the market turns or renting your home, or part of your home. Of course assuming you are not facing immediate circumstances that require you to sell. On the buying side, your goal is to buy, and literally that. No other options, including waiting again for the next downturn, as the market will be even more expensive in the next downturn than it is in this downturn!
Buyers have a relatively small window to make their moves and commit before things start turning against them. Those that see the figures and come around in a matter of weeks will be OK as they will realize soon enough, those that need to experience defeat a few times will come around, hopefully in time and thus be OK. It’s the naysayers who are at the highest risk.
The naysayers will look for ANY evidence to their claims of the market still being down. The most common being media talk and recent sales. With the rise of social media, it’s now very easy to be targeted that sort of information based on your search and activity history. If you're looking for articles stating this is temporary, even opinion articles, you’ll be served more and more due to retargeting, creating a false illusion. We can’t do anything about that, but we can give you the truth when it comes to these so called ‘Sales Comparables’.
We’ve all seen them. A $6,000,000 ($6M) listing that just sold for $2,900,000 (that’s $2.9M by the way.)
In truth it’s not a deal, it’s not a deal at all.The fact of the matter is, it was never worth that $6M in the first place. It was only worth $2.9M to begin with.
This is not just in the luxury market either. It happens all across the price board. Whether it’s a $850,000 home selling for $675,000, or a $20M mansion selling for $12M. The reality of this is just someone happened to try market value and the seller ended up being somewhat realistic.
What’s even worse than the above is basing your market conditions on these “examples”. You take a look at a couple of these and all of a sudden you’re going into every listing thinking your sweet, and the seller HAS to let you have it for $150,000 less than the asking price. Meanwhile while you are there about to get your deal of the year finally and …. Oh no wait, they have another offer, it’s gone. Sorry. On top of that it sold for close to asking price. The seller has no idea clearly, you know better of course ….. Until a few of these scenarios happen, or maybe you don’t even offer and months go by and the market is even hotter and you have nothing other than yourself on a lonely Valentines Day (Today is 100% February 14th as of writing this by the way, so it was funny if you are reading this in the future.)
TO MAKE MATTERS WORSE! When the market is trending upwards, no matter how slight, every sale is a new benchmark. So your delay in coming to terms with the reality of the situation, means you have directly cost yourself money, as the next similar property to come to market will come on higher than the last sale, we can guarantee you that.
This is why the market is currently so interesting, and literally why some people make or break it right now. Ego and self belief are one of the number one causes people miss out on these types of markets and end up with nothing….. Other than your new favourite Facebook Group who dream of the market tanking again of course. Hey, celebrate this small wins too right ….. Ouch.
Put the facts in front of you and realise these anomalies are not deals, they are just overpriced listings that sell for realistic pricing. It’s not a deal, it’s market value.
As you know we love a good tongue in cheek humour blog! Hoping you all have some amazing Valentines Day plans this evening and enjoy the long weekend!
Until next week,