How much is it worth? For both the home buyer and home seller, that is the $64,000 question today. As always, I’ll get to the point in due course.
My oldest hatchling turns 18 today. For her birthday, she wants what every young California girl formally entering adulthood wants – Drew Carey. So, being Mother-of-the-Year and all, Tuesday morning Becky and I will be stationed outside of the CBS studios in an attempt to gain admittance to the hallowed taping grounds of The Price is Right.
If she is lucky, my daughter (who will spend the next school year in a 10′ by 10′ dorm room) will return home with a Broyhill sofa, a Charmglow barbeque, or, better yet, a year’s supply of Mop & Glo, but I’m not counting on that. The problem is that my teenager has absolutely no concept of what anything really costs; for the better part of the past two decades she has been a kept girl. At least she is somewhat more prepared to address “the next item up for bid” than I – that is, unless they put a four-bedroom tract home on stage. Then I am smelling a Showcase round.
For those of you who have never had the pleasure of
having your large intestine removed attending a television show taping, I’ll give the brief rundown. You have obtained a ticket, one which says something fun like, “Ticket does not guarantee admittance! Tapings are overbooked! Admittance will be on a first-come basis! If you are smart, you will stay home and set your TIVO!” You will take this ticket, which is for the 1:00 taping, and arrive at the studio by 6:00 AM last October. You will sit on the sidewalk outside of the compound and twelve blocks from the actual point of entry, and wait to be assigned a number. Your number will involve scientific notation. You will sit for 1978 hours, during which time you will watch the friends of the friends of the producer, the production assistants, and the contestant coordinators, plus all of Drew Carey’s cousins, proceed gaily to the front of the line and through the pearly gates, leaving exactly 2 available seats for “the public.” Great work if you can get it.
The scene outside the studio is Real Estate 2000. “How much” was not a factor at that point. The real challenge was getting the chance to play. Buyers were so frenetic and sellers so few, that the “ticket” (the Multiple Listing) was rendered almost useless. To get in required a lot a tenacity, such as camping in your neighborhood of choice until you saw the telltale signs of a home about to go on the market. The unsuspecting home owner who merely decided it was time to wash their windows often found themselves buried in unsolicited purchase offers. For the would-be home buyer, it also helped to have connections. Homes often came and went without ever hitting the MLS; agent networks were priceless and back room deals were common.
The scene inside the studio was Real Estate 2000 as well. “How much” was whatever the seller wanted plus a little something extra for the buyer to distinguish himself from the other 47 people who had submitted offers on the home. The last one to bid, if he had been watching the show, knew to bid one dollar over. The last one to bid was always the winner.
Fast-forward to 2008. The old show has been canceled, and the studio audience is a much smaller crowd. We have too many empty seats. Sometimes, the seller is lucky to get just one person to play. Whatever that sole contestant bids will be right, even if the manufacturer’s suggested retail price suggests otherwise.
What’s a buyer to do? Should he bid on the first Showcase or wait to see what the next holds? If only we could get a glimpse of what lies to the right of those charts…
So, what’s it worth – today? That has become a very curious question to buyers, sellers, and (if we are honest) agents alike. In a dynamic market such as ours, both structuring an offer to purchase and pricing a home for sale have become so much less science and so much more art. In our Scripps Ranch housing market we have seen homes that languished for months and one bank-owned home this week that sold in one day with ten offers.
One thing I can say with some certainty is that buyer demand is overbooked right now. We see it at the open houses, we see it in our ad calls and in our web site search activity, and we hear it from our buyer clients. The show will go on, it must, it always does. Sales will pick up again, but only when the price is right.