Home buyers are being cautious this year. They are looking at more homes and making fewer offers. When they do find the home they want they offer less, sometimes much less than what the seller is asking.
Here are a few things to consider:
1. Not all homes are overpriced by 10 or 20% percent. Last time I checked sellers were getting within 96% of the asking price.
2. Most sellers will say no when the offer is for less than the value of the home. They will wait for a better offer.
3. When a home goes on the market we don’t know if someone will make an offer on it the first day or in a few months. Waiting for the price to go down doesn’t work.
There are homes that get offers the first week they are on the market. There are homes that are priced right and buyers pay close to the asking price. We are seeing multiple offers on some homes, with buyers paying more than the asking price.
There are buyers who find that perfect home but decide to hold off on it or to make a low offer. Those buyers can lose out to buyers who make a serious offer right away. Home prices in the twin cities have not gone down by 10 to 20% since last year.
Ask your Realtor for a market analysis before making an offer. Compare the prices of the comparable homes and compare the home to others that you have looked at. Don’t pay too much for your next home but don’t assume that all homes are overpriced and will be on the market for months either.
Homes do get away. Buyers are surprised when I call them to let them know that the home they have been thinking about buying was just sold to someone who made their best offer right away.
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Thanks for the support everyone. I actually expected to be reamed by some people, but I’m glad I stayed true to my beliefs. I think people sometimes forget who their audience is. I believe that the Carnival of Real Estate was designed for bloggers interested in sharing real estate information. Maybe there should be a carnival of Real Estate and another carnival for Real Estate blogging or for real estate professionals.
I think having two separate carnivals would help to clear up some confusion. If I were just a regular Joe who came upon the CoRE, I’d likely not come back because it normally doesn’t focus on what I want to read about. If it were more focused, I think the carnival would see a broader readership for its initial target audience.
Anwar khan auctions
As real estate information proliferates online, there are fewer and fewer opportunities to take advantage of information dyssymetry.
Truly, the best way to get a “steal” is to bid before anybody else knows the home is available.
In the end, a fairly priced home sells quickly and it’s the buyer and his agent that determine what’s fair.
My wife and I were surprised last summer when the home we bought was being aggressively sought after by more than one other buyer. We moved quickly (buying it on the first day it went on the market for more than the asking price) and we are really glad that we did. The media had us believing that we could wait it out and snatch it up when the buyer was desparate…the truth is that homes that are priced right and are great homes are going quickly. Another good post Teresa…
Jake – thanks for sharing your story.
Dan – I agree but the sellers have a say in it to.
Anwar – I will leave your comment but honestly don’t understand it.
Good article and Jake’s comment tells it like it really is.
GREAT Post, Teresa. I wish everyone (agents, buyers AND sellers) had such a clear grasp on the concept that every house, every price, every situation is different – check the comps and if you love the house – go for it and be serious!
Jennifer – you could have written this post. Your comment says it all.
1. Not all homes are overpriced by 10 or 20% percent. Last time I checked sellers were getting within 96% of the asking price.
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But a lot of them are quite overpriced. Market times on some houses are quite long.
As prices decline, each wave will have a group of buyers who think that they have hit the bottom. There are many bottoms on the way to the final one.
2. Most sellers will say no when the offer is for less than the value of the home. They will wait for a better offer.
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Value as determined by whom? The notion that there is some final knowable value for a given house is incorrect. All valuations are subjective. Because even the unit of pricing , the US dollar, varies in value. I would rephrase that to say that ‘most sellers will say no when the offer is for less than they THINK they can get. I know someone who turned down and offer of around 400k earlier this spring. House now listed for LOW 300′s. The market has not changed a ton since late winter. Someone valued the house at 400k eight months ago. Now, no takers at 310k.
Value is in the eye of the loanholder.
3. When a home goes on the market we don’t know if someone will make an offer on it the first day or in a few months. Waiting for the price to go down doesn’t work.
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Sure it does! I’ve watched many houses slowly slide down to prices where I was sure they would get snapped up. Many are still available at a price far lower than I would have dreamed. A few have sold. Oh, well. Plenty more where they came from.
Signed,
A Very Patient Buyer in Minneapolis
You go!
Teresa-
Agreed. I was, of course, being a little flippant with my answer
, but it comes down, as I see it, to emotion.
People who fall in love with a house risk overpaying more than the cold analytical type. However, it is certainly up to them if the disappointment over losing that house is worth paying a little more. Obviously, we can’t ever know. In that regard, however, I always like to say that it’s impossible to argue with a happy person. I have friends who overpaid a little or a lot, but I would never let on. They love their house (and they already closed, haha) so why ruin it for them just to be right?
For me, I lost a house I ‘loved’ in multiple offers, but I value staying in control of the financials more than the house. That makes me happier than getting the house would have.
So I will continue to play ‘chicken’ with various listings until I see something that motivates me.
That said, I am seeing more houses I like in my price range now than a few months ago. Houses I hate for $220k are downright tasty at $190k.
For what it is worth, I am predicting a turnaround in sales volume in about a year or so. I predict a price turnaround at least a couple years later. We have just finished one heck of a party, and it is going to take more than a bottle of windex and a couple hefty bags to clean up the mess. I think that the last of the “won’t-sell-for-less than-2005-prices” crowd will have finished their lessons in market forces by this time next year.
In about four years or so expect the man on the street’s conventional wisdom (rolleyes) to be that “housing is a terrible investment – it’s just a place to live” because by then we will all know at least one person who lost their house or nearly did. When the average person is terrified to buy because the prevailing wisdom is that “RE always goes down”, then it will time to start buying like crazy. There was a time in California not too many years ago where everyone knew someone who lost their personal fortune in RE. Wish I coulda bought then.
Signed,
Patient Buyer
Patient buyer – you bring up a valuable point. there is an emotional component and a home is worth what someone will pay for it. Buyers have a hard time leaving emotion out and as a result they do sometimes pay too much, but do they? what is value? to me they paid to much, to them they had to have it. So maybe a person is better off not get their dream house than they are getting it and paying too much for it. On the other hand homes are a place to live in. We have lived in ours for 18 years. If we paid too much for it, it really doesn’t matter at this point, at least not to us.
As for your predictions, we all have predictions.
Goodnight – very tired realtor.
thanks so much for the comments, I mean that sincerely.
Every home purchase I have made has been based on emotion. I didn’t low-ball my offers…they were the “home” I wanted. And, knock on wood, every on has worked out favorably.
Great post, Teresa and congrats on your Top 12… your are the Queen RE Blogger!
Teresa: Great post! What many buyers need to realize is that sellers have already discounted their home price to current market value.
Congratulations on your big win–and for being at the top of the Top 12 Women Bloggers.