Home Sales Limbo Rock: How Low Can You Go?

As the "limbo bar" of sales price continues to go lower, it seems fewer sellers are able to pass beneath it successfully and sell their homes. You've got to be a pretty flexible seller to be able to get under the limbo bar of today's prices.

All kidding aside, "how low can you go" seems to be the theme of the local market these days. For sellers, who are for the most part powerless to stop it, it is definitely NOT a fun game to play. But for buyers who realize it for what it is, this is a great buying opportunity--the likes of which we haven't seen for at least about 15 years and may not see for another 15 years.

It is ironic that buyers often don't see it this way. Rather, the common perception is: "because prices have and are going down,  I therefore don't want to buy." Why not?, I may ask. "Because I think prices will keep going down some more."

In the short term this is probably true. However, as another agent in my office were discussing today, the concern is that it never seems to be enough. It is precisely the same mistake that sellers made near the peak of the market. Rather than being grateful for the quick and massive rise in their home's value, sellers would say, "because prices have and are going up, I therefore won't sell my home. I want to hold onto it as long as I can, because every month it goes up more in value."

Again, in the short term that is true. However, the mistake we all see (now) that many sellers made is that it just wasn't enough. They were just a little too greedy. They postponed their sale longer and longer, thinking the home was going up more and more, and by the time they realized it had already peaked, it was--yep, you guessed it--too late. Then they held onto the peak price expectations, and were unsuccessful. Many of those sellers have still not been able to sell their home.

If you are thinking about buying a home sometime soon, don't make the same mistake that sellers made when the market was near the top. Just as those sellers should have taken the great prices they could get at the time and been happy with it, I hope you realize this opportunity for what it is.

Take the great prices you can get, and be happy with it. Don't do what the majority of buyers will inevitably do, which is to wait until it is clear the market has stabilized and improved and begun to rise in value again before deciding to make an offer. Worse, don't make the additional mistake of thinking you can lowball and ask for closing costs after the market starts to rebound. Then you'll keep getting "no" answers, and by the time you get it you'll be paying a lot more than you would have needed to (just like the sellers who are selling for much less than they would have gotten by not postponing their sale).

Bottom line: if you are buying for the right reasons (a home for your family to live in for at least 5 years or more), then realize this opportunity for what it is--a great opportunity--and find a great house for a great price, buy it, make it yours, and start earning equity as you make payments on your mortgage!

Take the opportunity and run with it!

Comments

[Tim Harris]

This is a very good analysis of current market conditions. Helping us to recognize the trends our market is something important to keep in mind.