Two years ago, we covered the Five Stages of Buyers’ Grief, which garnered 62 comments on the frustrations of homebuying, plus some critiques of the 2009 market conditions:
https://www.bubbleinfo.com/2009/06/19/five-stages-of-buyers-grief/
We’ve been following ProfHoff’s journey, and the other day she mentioned some of her frustrations/disbeliefs about the market. I sent her the condensed version – the three stages buyers go through today:
- I can’t believe these prices.
- Well maybe after everything I’ve seen sell for more than I thought, I might consider paying more for less.
- Dammit, just get this over with – pay what it takes.
Now is the time of year when the inventory is exhausted – every house has been picked over, and nobody wants them at their current list price. Yet sellers are slow to adjust – so most buyers are waiting for new listings and/or getting comfortable with the thought of a long, cold winter.
For buyers in this position, consider these strategies:
- Make lowball offers. While the vast majority of sellers and realtors expect you to just pay what the seller wants, occasionally you can find some that really need to sell – but are too ignorant or hopeful to lower the price. It is worth a try, especially with houses that have been on the market for months.
- Focus on houses with all the upgrades. At least if you have to pay more than you’d like, get a house in top condition, with all the extras included. Hold out for the best location possible.
- Work off the grid. Make sure you are working with an agent who is searching high and low for alternatives. Everyone is waiting for the new listings to hit, and they are very competitive.
Some of the competition should diminish here in the off-season, so keep your chops up!
JtR,
I want to throw my support behind approach number 3, especially because that is how we just bought our property up here in LA. We’d been looking since July 2009, having sold our house in June 2009. We’d gone through all the 3 stages described, had written six offers this Spring on all manner of properties, and we ended up buying in an off market, no realtor transaction that my mother in law’s best friend tipped us off to. We barely beat the local speculators/flippers to doorstep, but we did.
If you have a social network in the neighborhood(s) you want to buy in, you need to repeatedly remind your friends and relatives to keep their eyes open and ear to the ground, and pass on ANY lead about somebody who might be thinking about selling. Have your act together and be ready to pounce.
Although it’s ghoulish, start reading the obituaries and consider looking at the tax rolls in older areas to figure out who has been there a long, long time and has a really low cost basis, b/c chances are they’re older and might be open to selling. Be sure your agent is willing to knock on doors of folks in default to see if they might want to sell or short sell.
Good luck buyers.
Is it normal to go through the three buyers stages multiple times? 🙂 We’ve been in escrow twice before coming to our senses and realizing we were paying too much. But then we’ve also been beat out on multiple offers for properties that were priced well… even when trying to throw some “mustard” on it. I figure it will only be a month or so and I’ll be sick of looking again, get into a contract where I’m likely paying too much, and so goes the cycle!
My wife just admitted she is at stage 3, and we are paying too much. As the t-shirt says: “A happy life is a happy wife!”
I told JtR we aren’t the stage 3 types, but I could live with stage 2. It took four years to get past stage 1…
I’m confused about one thing…prices. How low do they need to go for the category 1 buyers to be happy? Prices are down something like 20%-50%, depending on area and price range. Are these buyers thinking they should have fallen 50% – 75% or something?
I look around and I see decent deals. I think too many people just have expectations that don’t match the reality of the market. After all, owners aren’t going to GIVE them away. 😉
Daniel, how odd… my t-shirt says, “A happy life is no wife”…
For Aztec: I guess it depends on how many fold of MHI people are willing to pay.
Around me, it is still 5X income. While there is some underground economy, I just can’t understand how that is sustainable. It is “special”, but not that special.
If it remains a choice of paying 5X income for a house that suits my family, or moving…well, I’m looking to relocate currently.
I fit in #2. Although I dont live in north county, I took the high road and bought in a marginally decent area, because quite frankly the disparity between marginally decent area and decent area can cost 100k+ more than I paid lat Nov for a house not nearly as nice in a possibly better part of the neighborhood than the former.
BUt I think I am a differnet breed of homeowner that is heavily involved in taking the time to roll up the sleeves and getting involved within the community to use whatever brains and tenacity I have to make it a better place.
I think that is what the trade off is. A little elbow grease for sort of ok or paying a heck of a lot more for just a little nicer.
Seller frustrations exist too…Jim and I shot new photos of our pad over the weekend, re-listed at 849k…$160 per sq. ft. 3 People through today! We will see what happens!
Jim, the market here in Western Sonoma county is very different. Prices are down substantially over the last year and I have seen an upsurge in new listings over the last 2 weeks. We still have a lot of stale listings in my small town that sit, sometimes for years but if you hit the price point you will be in escrow within a week. The high end is 30-40% off peak with many sales substantially below reproduction cost and the mid and low end are harder hit. An example, a very fine 8.36 acre estate parcel went on the MLS at 12:01 9/1/11 for $575k and after a small bidding war it sold for $625k all cash, 7 day close. In escrow 9/8. It is a one of a kind property but it shows that buyers are there and ready to move at the right price.
Aztec: Maybe there are decent deals in your area, but that’s not where the buyers are focused. I’m seeing a lot of the lingering few listings in the area I watch are still listed way above the sold comps. Despite being on the market forever with no accepted offers (i.e., never went “pending”) the price never comes down or only a few thousands to make it an “updated” listing–not anywhere near being close to market pricing.
And like Tom Stone said of his area, in mine as well, when something is priced right, it is gone in less than a week.
Shoppingaround, I am in Sebastopol,where are you located? And one other note, there are a few stale listings that finally hit a reasonable price,they seem to be difficult to sell now (These are places that were badly priced for a year or more).
Jim – not sure if this is the place to post this (over a week old, not sure if you read old posts), but I started to look into some of my not-first choice areas again (over Flower Hill, Del Dios Hwy, etc.)…
For your idea of #1 – make low ball offers…
Here is my question: What do you think the best/most accurate source of inventory is: zillow, redfin, trulia, ziprealty, sdlookup. I have not figured it out completely, but esp. with some of the older listings, it seems that they don’t all have the same info. What is the best source to see if a place is (a) still on the market 100-300 days later (b) has been taken off but not sold, (c) moved to pending/sold/etc.
Thanks.
Tom, I’m in North SD county, like Jim. I am focused on a particular neighborhood there. It had a lot of action at the peak, so it has a good amount (from a buyer’s perspective) of REOs and short sales now.
Big Perm, that’s what your realtor is for…I believe that Jim (or perhaps “wifey” 😉 ) can easily sort for you the kind/size/location you want within your Days on Market (DOM) range and then help you prepare an offer that is more market-driven than the owner’s current asking price and Jim will pitch it to their realtor to get her/him to buy in and convince (hopefully) the seller.
Jim can also access a lot of info on houses you liked that are now off market (which is not often available on other online sites unless you have all the old MLS numbers) and approach the owners directly on your behalf.
I haven’t found any internet sources that are fully accurate/complete; they can give you a perspective, but without knowing the houses/streets/etc. on a local level, they are rarely accurate on estimates.
One thing I like about redfin is that it pulls info from the county records, so you will (evetually) get info on sales that happen outsde the MLS.
Good Luck!