| Buyer Psychology in Today’s Market | January 12th, 2009 |
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Buyer reluctance is ironic since not so long ago buyers were incredibly excited about buying– and it was a sellers’ market. Just last summer people were buying like there was no tomorrow. Back then fear drove the market– buyers were afraid of losing out by not buying even through the advantage was all to the seller. Fear is still in the driver’s seat but now the tables are turned. Today it’s the fear of paying too much that stops buyers in their tracks. It’s ironic because they should have been afraid of paying too much last year. Now that there’s less cause to be fearful, they are still afraid to buy. There are two types of buyers– those who believe they can time the market and those who are always in the market and believe timing will find them. The first group defies logic– It’s impossible for any of us to know when we hit absolute bottom or when we are at the absolute top. The second group actively pays attention and may not always buy at the bottom or sell at the top, but always does well over time. People who buy in a buyers’ market are the smart ones. They know they’re in the ’safe zone’ where smart people plan to buy and sell. They aren’t looking for a killing because they know that’s a matter of luck not planning. Instead they seek a sound decision with a predictable result. Smart buyers also rely on experts who know the market and how to negotiate in it. You can read the papers all you want and listen to your buddies swap real estate war stories , but these sources can’t give you the whole picture. In a shifting market, reliance on good agents and seasoned mortgage professionals is more important than ever. We live and breathe the market every day and can offer you on the ground perspectives that go far beyond a single anecdote or media report. To real estate buyers, sellers and owners who haven’t been through this cycle before: You may have thought you could buy and sell every three to five years and make a killing on both ends. This economic idea is quite unrealistic. Any successful real estate investor will tell you that real wealth comes from the combination of appreciation plus debt paydown. There are certain facts about real estate that remain true in any kind of market. The most important one to understand is that real estate is a cyclical business. Market declines have happened before and they will happen again. What goes up must come down. But more importantly, what goes down has always come back up. Home values will most certainly continue their long-standing trend of appreciation over time. And equity buildup through mortgage debt paydown still remains a proven path to financial wealth. (This posting is a synopsis of an article published in this month’s Realtor Magazine by Gary Keller) Leave a Reply |
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A buyers’ market should be just that– a buyers’ market. By its very name it means buyers should be doing one thing and one thing only– buying. But the irony of a buyers’ market is that even through the opportunity to buy is high, buyers’ urgency hits an all-time low.