To almost quote Dionne Warwick, ‘Wishing, Hoping, Needing, & Praying’ are words that make real estate agents crazy. When buyers and sellers apply fantasy wishes to the real estate process it is a recipe for frustration and ultimately, failure. Not only is it “fool hardy”, it can be incredibly costly to the buyer and seller.
Listed below are scenarios where wishful thinking and not dealing with reality make for an unpleasant and unsuccessful real estate experience.
Sellers Not Understanding the Real Estate Market
Sellers who believe rising prices and a recovering market will go on indefinitely and do not comprehend inventory levels, distressed properties and rising interest rates can ultimately lead buyers astray. What created the housing bubble was the belief of homeowners that appreciation would go on forever. Understanding the trends and market is important. Look to banks, who use factors like appraisals and comps to determine fair market value. That is the market – not what you need, wish, have to have, or hope for. Fair market value “comps” is the “real” in establishing list price for “real estate”.
Buyers Misunderstanding Home Sale Price
From the buyer’s perspective, hoping the house you bid on receives no other offers is not reasonable thinking. In today’s market, there are many factors impacting price: investors, first time home buyers, and pent up demand of move-up buyers. Wishing the home were in another area or had a fourth bedroom does not make sense realistically. The home is what it is and it’s wise to expect that there will be other bidders you’re competing with.
Submitting Low Offers
Making lowball offers where competition is strong or inventory low, sets the buyers up for failure. Frequently the buyer becomes depressed, demotivated, and often leads to the buyer calling a time out and halting their search. As a result, it often leads to buying at a time when prices are even higher and the buyers getting even less for their money. Not dealing with reality or fair market value and wishing, hoping, and praying is a dangerous pitfall and a tremendous waste of time and effort and money that leads to great dissatisfaction of buyers and sellers. I strongly urge buyers and sellers to work with trusted, knowledgeable real estate agents who will educate them on “comps” and fair market value.
I always ask my wishful, unrealistic seller the following questions: “Based on the comps would you pay what you are asking?” Conversely, I ask my buyers: “Based on the comps would you sell this property for what you are offering?” Real estate sales are reality based. In today’s market, consumers are much more savvy and educated. Realtors must manage their clients and make sure they understand the process of fair market value when buying or selling properties in order to ensure a satisfied client and a successful transaction.