“There sure is a lot of crap out there.”
This from a buyer who by all practical measure has been bound and determined to see every single one of the 37,000 active listings currently on the market in the greater Phoenix area.
“Yep, there sure is.”
This from the weary Scottsdale Realtor who is barely suppressing the I-Told-You-So urge.
Throw out the tighter restrictions on financing. Forget about the would-be buyers who can’t buy because they are tied to a house they can’t sell. Pay no mind to interest rate surfers and bottom seekers. If there has been one under-reported factor influencing the purchasing habits of home buyers in the past six months, it has been an overabundance of choice. Believe it or not, but many of the folks fortunate enough to be in a position to buy in this market are being held hostage by … themselves. Give a person too many perceived options and watch the latter half of Newton’s first law of physics take hold.
The buyer at rest tends to stay at rest unless acted upon by a 1% interest rate and a crowbar.
As our inventory has slowly contracted in the last few months, however, so has the rationale for delaying the purchase that you want to make.
Now, before I go any further, repeat after me: “I want to buy a house.”
Sometimes, it can be helpful to remind yourself of the penultimate objective. It’s easy to get so wrapped up in the allure of winning a negotiation or the status of the current global economy that you forget what you are actually trying to accomplish.
I told people when there were 55,000 properties on the market, and I tell them today, the overwhelming majority of the homes I see are either overpriced or in deplorable condition. The sheer volume of the listing inventory has convinced buyers that they will have thousands of viable options and that they will basically get to name their price for the home that they want, but a rude awakening often awaits.
While conditions are ripe to secure a terrific value, those who expect hundreds of impeccable options for their specific criteria will be disappointed. The good properties and the good values still come and go with lightning speed, leaving the dawdling buyer to sift through the rest of the damaged goods that have been on the market for 300 days.
Want to make a steal? You can. But you have to be fast and you have to be well qualified ahead of time. Matter of fact, the last two bank properties that I went after with clients had a total of 25 offers between them. I went 1 for 2 in my pursuit, and the prices were bid up substantially in each instance because the list price was so far below market value.
It’s like 2005 with greatly reduced prices for this segment of the market. There is an armada of cash laden buyers looking for the same turnkey property at the same bargain basement price.
As such, not only may you have to pay over full price for that hot property, but you will likely purchase it “as is” with no seller warranties or disclosures if it is a foreclosure listing. That’s just life in the big city when you are dealing with a bank. Given the pricing, it is often worth it.
There will be those buyers, though, who still believe they can knock 100-200k off of any price due to the “buyer’s market” about which they have been hearing.
Newsflash: You only knock that kind of coin off a price when there is no demand for the product. In other words, the home must be overpriced or under-maintained significantly enough that it attracts no suitors.
I don’t know about you, but this doesn’t sound like the home I’d be after.
Don’t become one of the zombie house shoppers that turns into a hobbiest through unrealistic expectations. You know the type. At some point along the way, they go from being active home buyers to tourists when they fail to match up the reality of the marketplace with their preconceived notions. They wander around aimlessly every weekend looking at open houses and half-heartedly seeking sustenance for their undead pre-qual letters.
Realtor: “So, can you see yourself living in this home?”
Zombie Buyer: “Brains!”
You have to be ready to move when the right home comes along at the right price, lest you be resigned to thumbing through the stack of also-ran listings while the more pragmatic consumers eat up the good values.
Inertia, it’s a fickle thing. If you recognize value when you see it, you will be successful in securing it. Keep missing the good ones by submitting unrealistic offers or waiting for the magical unicorn to appear with the million dollar home and $100,000 price tag, and the sedentary buyer will seep further into the earth.
It’s a great time to be a buyer, but you have to separate the hype from your purchasing decisions. You might even find that some of the better values are found in the resale market now that sellers have begun to wise up and price more competitively with the banks, but that is fodder for another post.
Now, do you want to go speulunking, or do you want to buy a house? I’m up for either, but I need to know which shoes to wear.