Real Estate Trends & Advice - Buyers Don't Fool Yourself

Buyers, Don't Fool Yourself
By Jim Palmer Jr.

Recently a buyer traveled from the west side of our state to view several properties hoping to identify one that he could purchase to build a new home.  His west-side-broker didn’t accompany him so he relied on local brokers to show him various available properties.  He then went home across the mountains to ponder his choices.  He decided to write an offer on one particular property and did so through his west-side-broker who had never seen the property and was ignorant about land purchases. 

His offer was poorly written and very anemic, about $20,000 below the list price. His reasoning for the low offering was twofold, 1) the property had been on the market for over 6 months. 2) He had heard that the market was about to crash and that would mean “its a buyer’s market.” When his offer was countered at the full listed price, he quickly withdrew because he was offended that the seller would do that.  After all, his offer was a cash offer.
This scenario is not an isolated incident.  Buyers like this one brazenly throw out offers thinking that buyers have all the leverage in this sluggish market.  There is a problem with that reasoning though.  Even though the market has slowed considerably, inventories are still very low which has caused the median sales price to continue to rise. 

Buyers don’t fool yourself!  This sluggish market is not a buyer’s market.  There are occasional deals to be had because of the motivation factor for individual sellers, but for the most part, the sellers still have the upper hand because of the lack of inventory. 

In the case above, the seller has about 10 lots to sell and had listed the property at the beginning of the winter season last year. Showing access during the winter was difficult since the easement road construction had stalled because of weather conditions.  Thence the 6 month market time that the ignorant selling broker interpreted as the property being priced too high.  The fact is that neighboring parcels have recently sold for higher prices and the unmotivated seller was reluctant to accept any offer that would create a lower comparable for their remaining lots.

Inexperienced brokers, who only know the boom days of recent past, are conditioned to believe that when a listing doesn’t sell in a few days or weeks that it “must be over-priced.” Just because buyers seem scarce or reluctant because of interest rates, doesn’t mean a listing is overpriced.