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Are we at the bottom of the market? We could be, or we could be in for a long, hard uphill battle. Well let's be optimistic, but prepare for the worst, which doesn' mean closing the doors. Being in the real estate business is like riding a roller coaster. Although the market is nowhere near as volitile as the stock market, the attitude of a broker can be. I learned from my father when I was a kid "Attitude is 90% of the battle". It is so difficult to tell what the market is doing, which makes it difficult to keep a positive attitude.. One day is great because a couple of deals look like they are going to work out. The next day sucks because everything seems to be going to the drain. Keeping a level head and continuing to move forward, giving it our best, is much easier when we understand what the consumer is thinking. There are people out there who can and will buy. There are people out there who need to sell and will. The key is to understand why people are making these decisions, and how we can add value.
Everyone who purchased real estate over the past few years learned a good lesson, if they didn;t already know it. It's not just a pie in the sky, no brainer, investment decision. Regardless of whether its a primary residence, vacation home, or income producing investment purchase, there has to be value in the purchase. Each of these segments of residential real estate has a different value measure, relatively.
For the primary residence, its highly emotional. It's about the neighborhood schools, the neighborhood feel, the colors in the house, the design of the house, and the lifestyle that goes with the house. Of course, the price has to be in line with those values. There are many options out there. Most of the offers on these are lower than sellers like to see, because most of the buyers don't have to buy, and they know that alot of the sellers do. So sellers, if you don't need to sell, and you don't want to, or can't price the home competitively, take it off the market. Otherwise, fix everything, clean the house, don't let that buyer see anything wrong, stage the house. hopefully the mortgage messes can be worked out. The buyer wants to feel good vibes about living there. They want under valued property, and they want to look at a lot of them. It's the brokers job to help them save time by filtering the inventory.
Vacation homes are also emotional, but there is a combination of other factors too. Convenience, maintenance level, income potential, ammenities, prestige of the area, how much fun would it be to..., etc. These are luxuries and many people are having to forgoe luxuries around the world right now. It's a great time to go find a vacation home if you are financially able. Buyers want to be sure they are buying value, and the value of these things is very difficult to pin-point, so offers are generally low. Just expect it. However, if the property really has something special, to someone, the price can be commanded. Our office is at Wrightsville Beach, one of the most beautiful beaches on the east coast. We see this first hand. Not long ago, we turned down a listing for an ocean front house that had expired because the price was too high. It would make no sense to buy, when there were much less expensive, similar ocean front homes on the market. A few months later, this ocean front house was sold for the high asking price to a neighbor. It was to be torn down and replaced with a pool for the 2nd row house being built behind it. Thats a near 3 million dollar pool. Go figure?
Investment properties, to me, are the engines of the market and will be a major contributor to the recovery and growth of our economy. Investors buy them because they want a secure place to put their money, that will produce cash flow each month. Repeat, investors purchase them because they produce cash flow each month. The days of buying something with a negative cash flow and banking on the short term appreciation are over. Sure, appreciation is a great benefit of real estate. For investment property, its a side benefit. I laugh when I see properties on the market that say "investors, investors, great deal", but in reality, they are not good deals at all because they will cost money every month to own, unless the investor puts down more than 20%. Investors who are able to buy right now are the ones who know the rules. They made good purchases during the boom, or no purchase. Now they are looking to make deals with people who are ready to be reasonable about things. It's all about the numbers.
Anyway, real estate in general is a good buy. It serves many functions and has made many, many people wealthy. Consumer behavior is such a fascinating phenomina to study, and its so relevant. Understanding value, and why peolpe see value in things is crucial to being sucessful in any business. Regarless of what the market does, people will buy and people will sell. It's a matter of finding the value to them. It's happening today. If you know what consumers are thinking, and why they make the decisions they do, its much easier to keep a positive attitude when the media is pumping out the gloom and doom.