Many of the well-known books on investing talk about buying when their is blood in the streets.
That is, to take a contrarian view to things, to buy when everyone else is running or scared to do so.
To trust that a market will revert to a mean, or that over a long enough time horizon, prices will go back to their trend line.
I just wrote a lot about irrational behavior, and how crazy people become when it’s time to buy or sell real estate.
This is my every day, and I see more than my share of this behavior!
Especially right now.
When we are “in it”: that is, in a softening market, buyers and sellers get skittish, and more and more concerned.
No buyer wants to buy and then see their property lose value. No seller wants to sell if they think the market will strengthen and get them a higher price.
In either case, we have no crystal ball to see how elections next month affect the mood, or what will move the real estate market up or down.
Anyone who reads this regularly knows that I’m an optimistic person who hates to see dysfunctional markets, declining prices, unhappy sellers, confused buyers.
And there is no question that many buyers are sitting on the sidelines waiting for more concrete information.
Sellers who need to sell are getting a variety of advice on pricing.
Some sellers are angry with me that I’m too conservative on my pricing strategy.
Some are actually surprised that I’m coming in with a higher price than other agents!
The latter is very unusual feedback, as you might imagine!
The pendulum swings for agent advice, as it does for seller mentality.
For 12-18 months we saw a declining market, and sellers weren’t willing to sell lower than “next year’s prices.”
Now that the market sales data gets clearer every day that the market is down, listing agents are beating sellers while they are down- advising sometimes to really put extremely low prices onto the market.
I understand the inclination, and in almost all cases it is very hard to underprice an apartment- if they’ve done so, the market will push the price back up.
So, if there is an error, it should be to the downside on pricing.
YET- there is a limit to where this is true.
In cases where an apartment needs a lot of work, underpricing can be a tacit encouragement buyers to make “lowball” offers- it shows a little too much desperation.
If all of this uncertainty makes you scared, I would understand.
There is still a lot of unknown right now (as I’m writing this, the stock market is back from a massive drop that happened yesterday).
Though, the market is actually not that scary.
What can make it scary is a lack of information.
We can fix that.
Prices are down and each apartment requires a bit of price discovery in conjunction with historical data.
Make lower offers when appropriate, maybe make them a hair lower than you would otherwise.
And see how real the seller is.
If the seller isn’t realistic, move on.
No amount of arm twisting will overcome a stubborn seller.
Only time will do that.
And the real sellers will emerge.
Inventory has gone up for larger apartments, as much as 50% year over year.
Though the actual absorption of apartments has not gone up by a corresponding amount.
When properties are priced well, as they increasingly are, the pace of sales has increased a bit.
So over the next 1-2 quarters we will see how sellers respond.
For sellers: I know I sound like a broken record, but the market will find its level- and you will find a buyer who loves your apartment.
The challenge (and this is where I come in) is not to fumble the buyers who are interested in your property!
You may only have one chance to get a deal closed, as buyers sit in their lack of urgency.