Photo credit: Rebecca Berg (Go Scripps Ranch Falcons!)
We are working with enough buyers right now to fill the right field bleachers at Petco Park. For the most part, they are all waiting on the exact, same home — the one that is a “deal.”
A decade ago, the sacrifice was the popular play. Recognizing that there is no such thing as a perfect house, shopping for a home involved the old Ben Franklin approach. “I’d like a walk-in pantry, but I need a fourth bedroom. A three-car garage would be nice, but road noise is completely unacceptable.” Through a process of evaluating and ranking the positives and the negatives, the perfect home was the one that was the least imperfect within their budget.
Then came the days of double-digit home value appreciation in San Diego. The home purchase became the suicide squeeze, and budget no longer entered into the equation. That is because qualifying for a loan, any loan, required only the ability to make eye contact with a Mortgage Professional.
Buyer: I have a babysitting job on Saturdays.
Mortgage Professional: So, you make $87,000 an hour?
Buyer: Uh, OK.
Mortgage Professional: Congratulations! You’re qualified to purchase Tunisia. Go buy yourself something pretty.
On any given day in any given neighborhood, 17,356 to the twelfth power buyers were competing for the two homes on the market. Caught up in the While Supplies Last frenzy, the perfect home was the one with the For Sale sign in the front yard. “It does have three of the four walls we have always dreamed of. We’ll take it!”
Now, we are in the seventh inning stretch. The buyers who were decisively trounced in the early innings by a seller’s market, are enthusiastically waving their foam fingers. “We’re Number 1!” It’s pay back time. It’s not enough to get on base; buyers are swinging for fence. Everyone wants the same thing. They want perfection. They want a home run.
Lest I kill the metaphor, I’ll dive right into the point (after having dispensed with the requisite 400-word introduction). And there are two points, actually. First, there is no such thing as the perfect home — never has been, never will be. It doesn’t matter what the budget or the market. Unless you are Bill Gates or Warren Buffett, there is always going to be some feature you would have liked but didn’t get. And even Bill Gates, I suspect, has occasionally had to compromise. “Dang, I wish I had made that shipping channel just a little bit bigger.” In San Diego, we all want the big yard, the ocean view, the free-form pool with the mermaids who convey, the Viking appliances, the three-car garage, and the fully-stocked twenty-by-twenty wine cellar containing only French Chardonnays. (OK, maybe that last one is just me.) But sometimes, you are just going to have to give up something.
The second thing we are seeing is that everyone wants everything, and they want everything for a “deal.” That deal is defined as whatever the seller is asking minus a very big number. While the number varies among buyers, the concept rarely does. For one of our clients, the magic number is $100,000. If the home is priced at $500,000, they want to offer $400,000. If the price is $1.95, they want to offer the fuzzy change from their sofa and receive a credit of $99,999 towards non-recurring closing costs.
There is nothing wrong with having great expectations or writing low offers. It is the arbitrary nature of the magic number that is frustrating. Too many buyers don’t want to see the “comps” anymore. They don’t care. And too many of these same buyers are firing blanks, writing offer after unsuccessful offer, or worse. Many others are relegating themselves to the stands, waiting for an easier inning, a better “deal,” while the almost-perfect home passes them by.
Thankfully, we are starting to see more than a few serious buyers deciding that it is time to get in the game. The would-be buyers who are realistic, who are considering value, are starting to buy again. The homes they are purchasing are not perfect, and until we can say with certainty that we have seen the market bottom, they are not even the perfect “deals.” But, when these buyers look back at our current season, next year and in years to come, I firmly believe they are going to be pleased with the outcome.
(Note to bearish readers: Go easy on me. Even you have to admit we are getting closer to the pivitol turning point.)