There is always somebody with more reach than you have.
Not just more reach, but more frustration too, because they are further along in the hunt.
The Five Stages of Buyers’ Grief:
Denial – Buyers are adamant about not overpaying.
“The only house I’m buying is the one I can steal from the bank” is a common theme. Buyers read daily about how bad the economy is, how bad the real estate market is, and figure this might be a good opportunity. They begin their search.
Anger – With every house on the internet, most buyers take matters into their own hands.
They surf the web in search of that steal, thinking that there will be plenty laying around. How hard can it be to find a deal? But then they realize that a cursory overview of the inventory produces junkers and over-priced turkeys. Anger begins to set in when they realize it isn’t going to be as easy as they thought.
Bargaining – Early on every buyer wants to make low offers – we’re stealing one, right?
But the good listings always seems to have competing offers, with 95% of the buyers chasing 5-10% of the inventory. This is where ArtElectric’s thought comes in – there are other buyers who are further along in the five stages of buyers’ grief – and they outbid you. Virtually every buyer will lose out on 1-3 offers before succeeding.
Depression – It’s hard enough just to find a good deal, to then lose out on one or more is depressing.
Many give up for a while, deciding that it’s not meant to be, they’ll wait until the market comes down more, wait until the economy gets worse, banks unleash the shadow inventory, etc. But there’s a haunting feeling that it won’t get easier.
Acceptance – Buyers loosen up on their demand to steal one, and shift to acquisition mode.
By now most just want to get it over with, and accept that the successful search and purchase of a home is more time- and energy-consuming than they thought. The next one they find that suits their needs, they step up a little sooner, and a little higher than everyone else, and finally land one.
Today’s buyers don’t like these feelings, and many will wait it out, hoping it’ll get easier, later. But with the government backstopping the markets and banks being very deliberate about processing their short sales and REOs, it could be a long wait.
Will the banks start unloading? I think they could double or triple their output of REOs in good areas and sell every one of them today.
We’ll see if the demand holds up – the fourth quarter of 2009 should be very telling.