Arizona - Real Estate Delight

I have heard a phrase over and over lately when talking to real estate agents about strategies for getting homes sold. On the surface this strategy makes perfect sense in this housing market, however, it does not take the human factor into account.  The phrase that I've heard is "There is nothing in Real Estate that Price can't cure", which translates into the strategy known as "Price Improvement".  

The human factor that complicates implementation of the Price Improvement strategy can be one or all of the following factors:  pride, fear, greed, misinformation about market, and/or financial inability to cover a loss.  The real problem though is that this market (a buyer) does not care about what the seller owes, or what the seller paid, or what the appraiser says the value is, or what the seller thinks the value is, or what real estate agents think the value is. 

Buyer's get to delight in determining value by looking at the available homes in the areas of their choice and then picking the "best"  house for the lowest price.  Some buyer's are sitting on the side lines and missing out on one of the best housing markets in 16 years!  The selection of homes available to the buying public is amazing!  The ability to negotiate price, terms, conditions and timing has never been easier or more diverse.  But, what if the home recently purchased by the buyer looses value right after their purchase?  SO WHAT? 

If the new owner has no plans of flipping the house, and they bought the home with smart money and a sensible loan then they will be just fine in time.  Take a look at the average residential single family home appreciation during the first quarter of 1997 compared to the first quarter of 2007 and you will see that appreciation was around 16% per year! Not a bad return on investment.  And Metro Phoenix has all the right economics to perform in a similar fashion over the next 10 years.  Once buyers realize that home ownership is nothing like day trading stocks they seem to settle down and get on with their life plan and goals.  They get to realize the American dream of private party property rights.

Those of us in the real estate industry feel a deep sense of obligation to buyers to help them realize their dreams.    Once buyers realize that there is no reason to delay, there is no sense in waiting for some theoretical bottom of the market.  By the time it gets reported that the market has bottomed out, prices will already be on the rise and buyers will feel frustrated that they waited and waited and still missed out on the lowest possible price.

Message to Buyers:  Take Delight in the fact that you are calling the shots when comes to the value of homes.  Make reasonable offers and no motivated seller will turn you down.  Stay in your home for the average of 5-7 years and when you sell your home may the appreciation be way more than you planned. Or - what is the alternative?  Sit on the sidelines, put your plans on hold, and watch everyone else experiencing the joy of home ownership?

Timothy G. Theiss