Last night Lesley and I watched the movie “Date Night” with Steve Carell and Tina Fey. It was OK…not the funniest comedy I ever saw but for the most part enjoyable. Anyway, Tina Fey plays a Realtor and in one scene early on she’s showing a palatial mansion to some buyers and as they’re walking out of the place she tells them the house was originally listed for $1,850,000 but it’s been reduced since the market is slower and it’s now available for $320,000. She asks her clients if they want to write an offer. They respond by saying; “No, we think the market is going to go even lower”.
OMG…did that sound familiar! The question is, when is a deal really a deal? Or maybe another more relevant question could be…when do these rationalizations actually amount to inertia? My good friend and blog reader Michelle Kwok sent me a message the other day on facebook. Seems that she was chatting with a friend who told her she was looking to buy a house. She said:
“I am not in a hurry. I want a good deal, like paying about 60-70% of the value of the house.” I asked her, “Value now, value in 2006?” Turns out, she wants to buy a house and pay 70% of the current value, in Redwood Shores, Palo Alto, Menlo Park. And then she said, that she is patient, and is willing to wait for short sale/foreclosure.”
It’s funny because I had a guy I worked with, temporarily, about 5 years ago who told me roughly the same goal. Not sure what happened to him. It’s just, knowing what I do about the market around here, it’s hard to take seriously a buyer who states that they want to make an offer of $650,000 on a million dollar listing. Call me zany…but me-thinks it’s a waste of time. Oh, and that story in “Date Night”? That reduction would amount to over 80%. Folks…that was a joke. It’s a movie…they were joking. You see, it’s a comedy and they joke like that.
It’s not that I’m saying the market doesn’t decline…of course it does. It’s just simply that courageous buyers who take a shot are the ones that make the market decline. One small detail…they’re not getting 40% discounts either. The buyer’s that wait, strategically, and re-enter the market place at exactly the right time (the literal bottom) and scoop all other competitors…simply don’t exist. Unless, of course, they’re characters in a romantic comedy.
I think it’s the buyers that write offers when they have no competition, under asking that get the best deals. It happened after 9/11/2001, it happened in the 4th quarter of 2008 and in most of 2009. Those folks bought when others didn’t. It’s that simple.