Real Estate Games
Steve’s cell phone is on life support. First let me say that this comes as no surprise to the Berg nuclear family. He has a history of killing electronics.
In the early days, the cause of death could be easily established. When one falls into the spa with ones cell phone in his pocket, one will no longer be able to utilize the device for anything but a paperweight. There’s not enough white rice at a wedding to save a waterlogged Droid. Trust me.
Over time, however, his stuff just started checking for no obvious reason – so often, in fact, that you will find his picture at the counter of your nearest Verizon store. I believe he also enjoys the Customer of the Month parking space at Best Buy.
This is why I recently found myself killing time in Columbia, Missouri playing Fruit Ninja. Steve’s current phone, one that used to allow him to do all sorts of whiz-bang things — like receive emails and texts – has been relegated to no more than a simple talking device with a seven minute battery life. So while he purchased a stopgap car charger, I idled at the iPhone display killing fruit.
For the unfamiliar, it’s a goofy little game, this Fruit Ninja. As pomegranates and kiwi fly across the screen, you have to slice them without detonating bombs. More fruit means more points. Like any respectable game, it gets harder as you progress –to the point where passers-by, noticing your glazed eyes and spastic swiping movements, routinely assume that you are enjoying a day pass from the Happy Acres sanitarium.
Ultimately it’s just a time sucking exercise in futility, because you can never “win.” You may be momentarily entertained and even find yourself occasionally puffed with pride over your fruit salad-making awesomeness. Eventually, though, you will explode; it’s all about personal bests.
Ninja fruit is not a zero sum game. When I lose, someone else isn’t winning. Put another way, my success is not measured in the context of another’s failure. So goes real estate.
There remains this pervasive notion that one side of the transaction – the buyer or the seller – is going to become the victor. Buyers refer to these transactions as “smoking deals;” sellers tend to see it as getting “top dollar.” The reality is this: You will buy a home, or sell a home, for market value.
I have written about this before, the concept of market value. Market value is actually a range of value, because different people are, dare I say, different. For every person who wants a pool I can show you one that won’t even consider a home with a pool. One man’s wall paper is another man’s Sienna Sand paint palate; granite versus tile or Pergo instead of Berber – I can tell you on which side of these debates you will find your largest buyer pools, but the buyer who ultimately makes the offer is the “market,” at least at that moment.
As a seller, you may find that the market value of your home isn’t aligned with your expectations. That is not to say, however, that the buyer is winning and you are losing. It just is what it is, and I swear I am going to put that on a T-shirt someday.
If your home is on the market and you are not being shown, or if you have not received what you consider to be an acceptable offer, one of two things is going on. Your property is not being widely exposed and compellingly presented, or your pricing is out of whack. That’s all, folks. Sure, selling a home is a process, not an event, but consider the average market times in your area.
In Scripps Ranch, the average market time of detached home sold in December was 66 days. It was 61 days in November. Active detached listings, however, have been on the market for an average of 81 days. Give it time, of course, but at some point the market may be telling you something.
Now let’s take our places at the buyer side of the game board. We all want a smoking deal. If you don’t believe me, you weren’t looking for a parking space on Black Friday. But think about the holiday buying season. There were the occasional too-good-to-be-true sales – the sales involving “one in stock.” As a home buyer, you might encounter one of these offerings too, but be prepared for the pepper spray, because you won’t be the only one waving your checkbook in the air, and you will probably leave battered and empty handed.
What mostly happened on Black Friday was that retailers priced the products to position themselves favorably relative to their competition. They were focused on attracting the most buyers from the finite buyer pool, and while their events were promoted as “sales,” they weren’t really sales at all. That’s because when everything is price reduced, you’ve simply established a market. Pricing is inextricably linked to supply and demand; it is a response to current economic conditions. This holds true whether we are talking about cashmere sweaters or homes.
Still don’t believe me that Black Friday was not brimming with “bargains?” Look at prices for those same retailers and for those same products today. The “sales” are still in effect. In many cases, in fact, prices are lower yet. If I can buy the same purse at a dozen different stores for the same discounted price, it is not discounted at all — unless my basis of comparison is 2004.
As a buyer, then, prices are what they are – today. That’s not to say that there isn’t room to negotiate. Of course there is. Depending on the seller’s needs and motivation, certain terms (like timing, financing and all those little contingency sticking points) may have value to the seller and may translate to a lower price. But it’s still not a zero sum game. There is give and take and, hopefully, a lot of what we call “dealing in good faith.” In most successful transactions, both parties ultimately benefit.
I see too many buyers playing to beat the seller instead of playing for a personal best. They take the asking price and offer 10 or 20% less, not because this seems like a fair price, but because it seems like a victory. Much like the sellers whose homes have languished on the market for too long, these buyers languish in the market for too long, firing too many blanks and missing too many opportunities.
The moral, I suppose, is this: Know the market. And I don’t mean the Case-Shiller macro-portrayal, but your market in your ‘hood. Your agent can help you with this. Know what your goals are and try to reach – even exceed — them. Your agent can help with this also. You aren’t buying a pair of shoes; don’t rush things. But at the same time, remember against whom you are playing. It’s not the other party to the transaction. And if you keep missing your targets, you might just be playing against yourself.