“They Must Be On Drugs”

Jonathan Dalton, Phoenix Real Estate AgentThe difference in perception between sellers and buyers truly can be amazing.

Sellers always believe their home is worth more than it is because, well, it’s their home and it’s always been nicer than the one down the block.

Buyers always know what a home is worth because they know what property values were when they last purchased a house and isn’t this a down market anyway?

This is why real estate agents refer back to the comps – sales of comparable homes – when trying to assist in determining a fair value for a house. On the selling side we’re also looking hard at the Active listings as those represent the competition. (Actives also are helpful in dispelling the “but they’re home is listed at $xxx” argument. It’s listed there. It won’t sell there.)

Last night I was showing a house to determinedly unrepresented buyers. They’d had an agent, the agent apparently didn’t relay their reason for rejecting a counter offer and so they fired the agent and have been calling off signs ever since.

Husband asks wife the list price. Wife responds. Husband says, “they must be on drugs!”

Well, no. Not according to comparable sales not just in that neighborhood but anywhere in the high school boundaries for Sandra Day O’Connor High School. Simply put the home’s fairly priced. As a buyer, you have the opportunity to offer whatever you choose but at least based on the recent sales, the seller isn’t on drugs.

What concerned me is the conclusion that the price was out of whack came without looking at a shred of objective evidence. It’s just a gut feeling that the price is too high. Which may be valid, as it’s too high for this particular buyer, but not necessarily accurate.

The market here is slow. Not as slow as it was a few months ago, but slow. But homes also are not being given away. Prices are not reverting back to 1974.

For those who want to buy … who truly want to buy … you owe it to yourself to at least look at the comps and do some research before weighing in on a home’s value. Unless you happen to be an appraiser or otherwise spend your days evaluating homes.

Gut feelings can be wrong as often or even more often than they’re right. And if you’re wrong enough, you’ll find yourself being an eternal renter.

[tags]Phoenix real estate[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

0 Comments

  • Charleston real estate today 10 years ago

    Jonathan, some buyers think a buyers market means they can abuse the seller. It likely didn’t matter whether the seller priced it realistically, some buyers will always think it’s overpriced. In this case, they aren’t interested in buying a house, they want to steal a house.

  • Matt Vu\ish 10 years ago

    The sales will start only after the prices come back to normal. I see sellers still expecting 20-30% premium and comps being compared to houses sold in 2005. I don’t say that buyers need to be disrespectful, but I did not hear anyone protecting buyers when the market was booming. The market has to cool down, the faster it does the better it will be and sales will pick up.

  • Tiffany Cloud 10 years ago

    In the ‘hot’ market of 05-06 I saw too many seller’s taking advantage of buyer’s. It was a disturbing to see seller’s taking advantage of buyer’s without a second thought. There is the business side of things and then there is just an abnormal amount of glee that comes from ”sticking it too someone’ – I call it greed. Unfortunately, I am seeing the same behavior on the buyer’s side now. It’s like my kiddos – my oldest who will sometimes push, and push and push her younger sister even after her sister has already reached her breaking point. I ask my oldest, “why do you have to do that – what are you gaining? She is already crying – why do you keep going?” I suppose some of us never grow beyond that.

  • Jonathan Dalton 10 years ago

    Howard – quite possible. I’d probably feel differently if they’d at least been interested in where the current market was.

    Tiffany – most buyers I’ve seen aren’t malicious about it, but there are a few who are adamant in offering a price that hasn’t existed in 10-plus years and nothing will convince them that they aren’t right. I still believe in “win-win” scenarios but not all buyers want that.

    Matt – I’m not arguing for protecting sellers but I am saying that it’s worth at least looking to see what the current market may be. I work with a lot of Canadians whose friends tell them you can be homes at 50% of list price anywhere in the Valley you want. That’s not even close to true.

    On the flip side, there were a lot of buyers who didn’t want to be protected in 2005. Many were akin to the folks putting all their money in JDS Uniphase in 1999. Try to talk to them about diversification and they’d tell me that they didn’t need my advice, they knew what they were doing.

    Indeed.

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