The "Buyer's Market" discount is already built-in

Real Estate Agent with John L. Scott MPV 104970

Discount Homes Everett WAThe "Buyer's Market" discount is already built-in

When I go to a restaurant I always tip my waitress. Don't you? Is it because she gave me excellent service? Not completely. Yeah I might give a bigger tip, but I've also been known to give at least a small tip even when service was poor. I guess I was just trained to always tip. My parents always tipped and so I do as well. It's a psychological thing. We just assume it's expected.

Why do I get the feeling that some people have this same type of psychological reaction to buying a home? How often have you had one of those buyers that has a perception of what a discount home is in their mind. This buyer sees a house and wants to offer 10% off list price. Then sees another house and wants to again offer a 10% discount off list price, and again and again the same thing. It's like they have it input into their brain that in order for them to feel the warm fuzzies of getting a "good deal" it therefor must be X percent off of the list price. While this may give that buyer the warm fuzzies they so desire, the logic in this is completely flawed, particularly in this transitional market.

That's right. I said it. TRANSITIONAL MARKET! What the heck does that mean? Well. It's certainly not a seller's market, and I've seen blogs arguing not a buyer's market either. It's certainly not equilibrium. Really, its the banks that are holding the power in this market and frankly I don't know what the heck to call it so I'm going with "transitional". What we are transitioning too is anyone's guess but there is clearly no well defined label for this crazy time.

So what's my point? Well, the media for the last few years has touted that this is an amazing buyer's market and the problem with this is that when a buyer hears this, it triggers that discount mentality in their brain. Buyers assume that because they feel it is a "buyer's market" that they should be entitled to offer well below list price, plus ask closing costs, and extras, and then ask for everything under the sun in the inspection. They feel they are only getting that "discount home" if they get all of those things. They are not considering that they are buying a home for $150k which the sellers purchased 4 years ago for $275k. If that's not already a discount home, I don't know what is. Buyers in "buyer's markets" simply assume this is acceptable given the current market being what they feel to be in their favor. Discount Homes Everett WA

In this market, that is WRONG!

You see, in THIS market, we have sellers that are so desperate to sell that they have discountedand slashed their prices so low ALREADY, just to compete with all the REOs and short sales, that they have no wiggle room left. We have sellers who are selling because they can't afford to live there anymore and certainly don't have the money to do all those repairs your buyers want, let alone add a new roof for them. We have listing agents who are severely discounting short sale listings in hopes of simply getting any offer they can just so they can have something to present to the bank, only to get a counter offer back from the bank for $80,000 more. THAT is the market we are in.

So just because your uncle's cousin said its a "buyer's market" and you can get good deals. That doesn't mean those good deals are not already built into the listing offer price. A "discount home" is not always X% off of the list price. Many good deals are already built into the price and while sometimes their is wiggle room, it should not be assumed. A good agent in this market needs to be encouraging their buyers to look at every home on an individual basis to determine what each home is really worth and not just considering it a good deal if they get a discount off the list price. Perhaps this market is teaching agents to do things the right way that we should have been done all along?

Comments (3)

Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Good point.  I always have to send the buyer's agent comps to show them that the PRICE is at the discounted market after they make their low ball offer.  There are still those that want a deal on a deal.

Jul 14, 2010 05:18 AM
Ted Tyndall
Davidson Realty Inc. - Saint Augustine, FL
I will help You find the Home YOU want to Buy

Jeff, we have the same problem. You work hard to get the seller to price the home properly. Then the buyer comes along and makes an absurd offer like the house is not already discounted. It's almost like a game.

Jul 14, 2010 05:19 AM
Don Spera
CR Property Group, LLC - East York, PA
Serving York and Adams County, PA

I would not want to be an appraiser right now as things are all over the board and also back when the market was good.  That is why their nooses have been tightened.  No matter what, justify value on both sides as recent as possible and there should be no issues.

Jul 14, 2010 07:49 AM