Now & Then

Sometimes it really astonishes me just how much has changed in just a few years as far as the real estate market goes. From 1998 to about 2007 almost nothing could effect a buyer’s desire for a house. No flaw was big enough to discourage a buyer…and sometimes that went to ridiculous lengths. In 2005 a 3 bedroom, 1 bath house in San Mateo needed almost everything. It was reduced to the studs inside and when you entered you walked across some sheetrock laying over the exposed floors beams to get around in there. Since most of the floor was exposed you could literally see into the sub area and when you did indeed look down there it was apparent that one of the foundation’s perimeter walls had fallen over…exposing the sub area to the outside. The house had no kitchen and bathrooms. It got multiple offers. “What’s a little fixer?” seemed to be the theme at this place. It was the theme at lots of other places then too.

Now, it’s a completely different story. In 2011, people express enormous concern over just about everything. Once upon a time, nobody cared at all about pest reports that were under $15,000 in needed work. Now I hear fear expressed when there’s $5000.00 on a report. Buyer’s want either the perfect house, or they want to be compensated for the houses deficiencies.

There’s really nothing wrong with that of course, it’s just the psychology that fascinates me. I would expect that people would naturally see an opportunity in defects in a home and use those defects to better their deal. It’s simple leverage. What surprises me is the level of fear expressed about things that just a few years ago seemed like no big deal to the average buyer. How does a buyer go from essentially yawning about dryrot one year, to panicing about it in another year? I kid you not, people want $100,000 discounts for $15,000 issues because they feel overwhelmed by them.

It works with sellers to, of course. It’s common right now for a seller to feel like they’ve “lost” money when they have to take a price reduction. Actually, no money was lost…because it was never there to begin with. I just saw a comment from a blog reader that the Beach Park house I posted about last week, listed for $475,000 got 40 offers. I guess that house’s lack of a kitchen and all the needed work, plus the fact that it’s a short sale didn’t really mean anything to these buyers. They saw an opportunity for a deal and went for it. It’ll be interesting to see where it closes. Seriously, fear is an amazing motivator. Folks are either afraid they’ll miss an opportunity or they’re afraid they’ll get screwed.

Comments

  1. Michelle says:

    The only thing we have to fear is fear itself?

  2. Well, it is not necessary a change of psychology. It is probably mostly a change of “pool” of buyers. The people who were buying fixers are mostly likely NOT the same set of people buying homes in 2010 and 2011. Obviously, people who are buying now are probably more prudent and risk-averse than the ones buying in 2005. Just a guess, of course.

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