In my last podcast I addressed some of the issues facing home buyers – and more particularly, first time home buyers in our current sellers market. I also promised to get back to you with some do’s and don’ts for managing this market. So let’s start with one of the bigger don’ts! And this don’t – though geared to buyers, applies just as much to sellers.
Don’t try to beat the market! This is one of the biggest mistakes I see. Instead of dealing realistically with the market that they are given, some buyers dig in their heels and try to hunt down the last bargain in Westchester.
The trouble with that is simple: with everything out in the open on the internet, there is no way anyone could hide a secret stash of bargain houses – even if they wanted to, which in itself is highly unlikely.
To illustrate this I’m going to tell you a true story:
A couple of years ago I was trying to work with a client who was determined to get a bargain in a well known luxury condo in downtown White Plains. It was 2013 and prices were appreciating again, but he was absolutely determined. And it became obvious that he really was hoping for a “steal”. One day he called me with something he found on Trulia. It was listed as “active” and the asking price was about $250k below market value. What a STEAL! This was a fire-sale if there ever had been one! He wanted to “get in fast”.
The fact that it wasn’t on the MLS was more than a little suspicious. I knew that there was probably a logical explanation for this situation. I also knew that it probably didn’t include a home-seller that was willing to leave a quarter of a million on the table for no good reason.
Nevertheless, I called the agent and left several messages. No response. Crickets…. I then tried email and texting…more crickets. I then spent several days sending a blizzard of emails, voicemails and texts. Still crickets… confirming my initial concerns that if it looks too good to be true, it probably is.
Several days later a particularly exhausted and frustrated agent called me to let me know that the posting was an error made by Trulia and that they were trying to get it taken down. The unit had been on the market for that price – two years ago at the height of the housing collapse. For some strange reason, Trulia had re-listed it by mistake. As a result the agent found himself buried under a barrage of voice mails, emails and texts. It was like a cattle call for all bargain hunters. The agent had stopped responding because he was completely overwhelmed.
All these buyers were thinking the same thing: if they “got in there fast” they could possibly win the lottery on a luxury condo – all for a listing that didn’t really exist.
This incident underlines a particular point that I made in my previous podcast. Which was that the market – like the Borg in Star Trek has its own mind or its own collective will. Trying to beat a market is almost always an exercise in futility. The difficulty is that even had this been a real listing NO ONE would have secured the purchase for $250k off market value.
Because even if the seller and their agent had so grossly misjudged the current market, to underprice a home in this way, they would have raised the price the minute they saw people coming out of the woodwork to make offers. In other words, the market conditions would still have determined the price.
That’s why trying to beat an appreciating market really makes no sense. Buyers who pursue this tactic month after month only shoot themselves in the foot. After all, in an appreciating market, prices are rising. If they spend a year chasing bargains and the market rises 5%, they are either going to be paying substantially more for essentially the same thing, or they are going to get less house for the same amount of money. Either way, its a lose-lose.
So my sincere advice is don’t do this. To work with the market that you have. And yes, there are often bargains out there. But that’s generally in the fixer-upper market. A market that might work for some, but won’t for others.
© 2015 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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