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Are your buyers holding out for the market to "hit rock bottom"?

By Peter Mann

Real Estate Agent with Keller Williams Realty

August 22, 2008 05:52 AM

Mr Buyer, do you have a crystal ball?

First of all, I find it hilarious how everybody is an expert these days :-) With msnbc, local news, zillow, etc, everybody seems to be a real estate expert! I had a buyer prospect tell me last night that the reason he is not willing to make a move on a property just yet is because he is waiting for the market to hit rock bottom first. This has been a common tune for quite some time and I am sure it will continue for a while. To be honest, I enjoy speaking to people and educating them them on the facts because its fun for me (go ahead, call me a nerd).

Here is how a small segment of our conversation went(I may not have gotten it word for word but I am positive that I am pretty darn close :-)

ME: So I can better understand your needs and goals, please share with me why it is you are holding out for the bottom of the market?

PROSPECT: Becasue thats what any intelligent buyer would do. You don't buy stocks in the peak of their performance... same thing with real estate.

ME: That is very true, but without a crystal ball how will you know WHEN we have hit rock bottom? That is the million dollar question right now.

PROSPECT: With all the resources these days, word will travel quickly. Its not as if I will have to predict an actual date. Its a buyers market right now but I want to get the best deal possible.

ME: Hmm... would it make sense if I told you that there are thousands of people out there who are looking for the exact same thing you are? If you wait too long, interest rates can eventually creep up, bidding wars will always be present on any aggressively priced listing and the chances of you getting that so called "killer deal" may not be as good as you thought.

PROSPECT: Well sure, but that is the chance I am willing to take because I am in no hurry to buy.

Does that sound like anybody you have talked to recently?

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Jason Crouch

Austin Texas Homes, LLC - Austin, TX

Broker - Austin Texas Real Estate (512-796-7653)

Peter - Actually, it sounds like almost everyone that I speak to these days. Nice post!

Aug 22, 2008 06:04 AM

Daniel J. Brudnok, REALTOR

Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA

SRES, e-PRO,ABR,GREEN,CSP

Jason,

When you find that one person who can exactly pick the market bottom...please share.....LOL

Aug 22, 2008 06:06 AM

Linda Mae Croom

Topock, AZ

(928) 768-3040

I second Jason's comment. "It DOES sound like almost Everyone I talk to"

Aug 22, 2008 06:07 AM

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thank you Jason, Dan and Linda for your comments. I thought it was just me that was hearing that tune over and over so thank you all for confirming that I am not alone :-)

Aug 22, 2008 06:09 AM

Michael Wayne Jackson

Coldwell Banker - Novato, CA

Broker - Seniors Real Estate Specialist Novato

Great post Peter. There are a lot of conversations just like this one. The buyers who acting now will reap the benefits later.

Aug 22, 2008 06:12 AM

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thank you for you comment Mike. I find that I spend a lot of time educationg clients on this same subject. You are right on when you say those who buy now will reap the benefits later!

Aug 22, 2008 06:16 AM

Justin Ukaoma

Vizion KC - Kansas City, MO

Kansas City Real Estate Investments

Peter I just wrote a very similar post. Sometmes people just do not understand.

Aug 22, 2008 06:29 AM

Li Read

Sea to Sky Premier Properties (Salt Spring) - Salt Spring Island, BC

Caring expertise...knowledge for you!

Like, "everyone"! When no one knows what to do, when the ground keeps shifting underfoot, no clear direction, just a lot of treading water in the middle of the swimming pool, then it's inevitable that there will be a prolonged hesitation in action.

Aug 22, 2008 06:42 AM

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thank you Justin and Li for your comments. Just in case everybody didn't know, that last question in bold was asked out of total sarcasm! I guess that is the only down side to reading something compared to hearing it :-) Next time, I will add (sarcastic tone of voice) after the question :-)

Aug 22, 2008 08:14 AM

Sharon Young

Ivy League Mortgage Philadelphia, Pa - Southampton, PA

I'm with Jason too ... everybody's waiting for THE BOTTOM! Imagine the mad rush of buyers we are going to have on the day of THE BOTTOM! It will be llike a marathon .... whoohooo!! I hope they remember to feature it on the evening news so everyone can take off the next day and line up at the nearest RE office and BUY AT THE BOTTOM! (sorry - I'm annoyed today) Good post BTW

Aug 22, 2008 09:16 AM

Anonymous

Nancy Morgan

Yes, this line sounds very familiar. Everyone thinks prices are going to keep coming down. Unfortunately, the news media supports this view and many people seem to rely on the media in order to form their opinions.

Aug 22, 2008 09:29 AM

#11

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thank you Sharon and Nancy for your comments.

SHARON: So how was the hurricane? Do your house and your puppies make it through okay?

Aug 22, 2008 11:24 AM

Sharon Young

Ivy League Mortgage Philadelphia, Pa - Southampton, PA

Peter ... it was a disappointing tropical storm! But we have been getting a ton of rain this week. I think it was 25 inches in a couple days. But our grass is green and our lakes are full. Everything is fine - at least in our area. Thanks for asking!

Aug 22, 2008 11:41 AM

Konnie Mac McCarthy

MacNificent Properties, LLC - Cobb Island, MD

Broker/Owner - VA & MD "Time To Get A Move On!"

Yes, and I set those people up on automatic emails...and let them look til the cows come home.

Aug 22, 2008 02:47 PM

Pam Pugmire

Silvercreek Realty Group - Meridian, ID

Meridian Idaho Real Estate

Peter~By the time they can tell it's the bottom of the market, the bottom will be past! But yet they all still want to wait. Go figure!

Aug 22, 2008 04:47 PM

Anonymous

John Jamison

Ok, now let me bring everyone back to reality. I am a buyer, most people are not waiting for rock bottom. I am sorry guys it doesn't work that way. That is not the mind set of buyers, it sounds more like a seller. Buyers believe the price of homes are still to high. I won't buy until mortgages for home prices become similar to what I pay in rent. I don't mean to bust your bubble but this is the truth. Forget the bottom, its all about affordability in todays buyers mind. You guys need to remember the ones that are buying today or at least can buy in the near future intentionally sat out because of the realization of over priced homes and shady lenders. They new better, so now its there turn to benefit from it. And yes they are taking there time. I will admit I am, these are my credentials 20% downpayment, over 700 fico, and six figure salary with no credit card debt. This leaves me with time to pick out the investment I feel most comfortable with. Time is on my side.

Aug 24, 2008 07:38 AM

#16

Hollis Tidwell

MoneyCafe USA,llc - Denver, CO

I agree this is probably what most people say and I can't blame them. What we have to do if we want the market to get moving again is get rid of the inventory that is out there. Seller must get off the rediculous prices that increased over the past 8 years and get back to realty. We should educating sellers that they are in a time that is going to require them to drop the prices, take their loses and move on and get their gains back in the next property. Other wise the time value of money will never work in their favor and they will die on the vine and never recover in their life time. It's time we work to help everyone understand their role in this changing finacial times. Some unforutnately have to suffer a bit some others will move forward. The in the long run everyone gains. We dont' have but one life and being stuck in it and waiting for that once in a life time buyer when the financial work is upside down , can keep you from your dreams for ever. Sellers need to get off the prices take their loses and move on or take their house off the market. It's really that simple. remember the late eighties and home prices dropped 60% in many areas of the country. better to take a40% lose than to take 60%, so go figure its simple math and it is going to happen again over the next three to five year. or probably sooner..

Aug 24, 2008 07:49 AM

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thank you John and Hollis for your comments.

JOHN: I apologize if you were offended in any way by what you read within this posting, but like any topic of discussion, people must agree to disagree :-) The majority of the comments made were by Realtors like myself who are simply speaking from their own personal experiences. To be completely honest, I speak to prospective buyers daily who claim that they are holding out for prices to hit the bottom (or close to it). As you stated in your posting, if time is on your side then more power to you. You are in a great position and should feel comfortable. I am well aware that qualified buyers sat out and waited because of over priced homes, but many of these qualified buyers are the same people who are telling me that they are waiting for the bottom. Again, I m just sharing what I have personally heard with my own ears. Please forgive me if I am missing something, but I am a bit confused at your comment "That is not the mind set of buyers, it sounds more like a seller". Why on earth would a seller want to wait for the market to hit rock bottom? Also, you said "I won't buy until mortgages for home prices become similar to what I pay in rent". I am not sure what area of the country you live in, but if mortgage payments (including taxes and insurance) become similar to rental prices then I REALLY want to know where you live! If that were the case there would be very little demand for rental property because everybody would be buying.

Aug 25, 2008 05:50 AM

Kathy Clulow

Uxbridge, ON

Trusted For Experience - Respected For Results

Peter - His last line would tell me he is just a tire kicker put him on automatic and forget him till the prices start to rise or mtg rates start to climb.

Sep 23, 2008 10:56 AM

Peter Mann

Keller Williams Realty - Bellevue, WA

Peter Mann Seattle-Bellevue Real Estate Agent

Thanks for the response Kathy :-) I appreciate it!

Sep 24, 2008 03:22 AM