St. Paul’s Teresa Boardman answers the question this morning, “How is business?” “It’s like running through mud,” she says. A country may separate us and our markets, but I have to agree with her spot-on synopsis.
Never was this an easy business, yet never has it been more difficult. I remember the first transaction in which I was involved that resulted in cancellation. “Falling out of escrow” was a concept I had heard of, the stuff of folklore, but I had never personally experienced it. Some five or so years later, and agents tend to breathe a sigh of relief when the transaction doesn’t fall apart.
The difficulties we are having are mostly but not entirely market driven. First, there is the purchase contract we started using in California several years ago. This may not seem like a big deal on the face, but it really served to change the attitudes of buyers in the transaction. The previous contract had a “passive method” of contingency removal whereby time frames came and went and, absent objection in writing, a contingency was deemed waived once the corresponding date on the calendar was a memory. Now, our contract by default assumes an “active method” of contingency removal; a buyer must affirmatively remove contingencies in writing. Absent written removal, contingencies remain in effect. The result has been that reasonableness tests have gone out the window. Buyers now tend to view their contingency period as a “free look,” a dating period, and there is generally no feeling of obligation to justify dumping you, the seller. Think of this shift in buyer attitude as similar to a shift in cultural attitudes, one which suddenly made it easy and OK to divorce. Commitment is an elusive partner.
Then, there are the market conditions. More choices and more time for the buyers to make their choices: These are good things, reminiscent of a more stable market. Yet, I am seeing what is arguably a less healthy trend. Our multiple offers of yesterday have been replaced with reverse-multiples; it is becoming fashionable for the buyer to offer on two or more homes at once, an exercise of throwing a bunch of contracts at the wall to see which, if any, may stick. This involves more work for everyone, and it involves more stress for everyone.
Market conditions are playing a huge role in escalating the degree of difficulty for all involved. We are with our buyer clients longer, sometimes months or even a year or more. So many choices and so many economic and pricing fears, and the decision to purchase is longer coming — if it comes at all. The homes of our seller clients remain on the market much longer. Not only does this add very real costs to the agent’s bottom line, but emotions and stress levels of all involved tend to increase in proportion to the number of days without a sale. Try keeping your own home in show condition every minute of every day for six months or longer. It will wear on you. And, sometimes the sale never comes.
This year, like all of the years before, I heard sellers saying that they would wait for the Spring/Summer rush before listing. I also heard buyers saying that they would wait until the peak Summer buying season had passed before looking in earnest.
Here we are today, our last chance at June, and I am wondering when exactly this “Summer” peak is going to kick in. By all accounts, it isn’t. Our typical, expected seasonally variations have been trumped by the bigger market card. Take Scripps Ranch:
Teresa says she is walking through mud in St. Paul. In San Diego, our seasonal home sales have been slower than molasses, and I often feel like I am beating my head against a slab granite counter top.