Wednesday, July 4, 2007

Myths of a Buyers Market

For the better part of two, maybe three, years, communities throughout the Twin Cities, Minnesota and the entire U.S. have been in the throws of a full fledged buyers market. Sellers have adjusted their minds and their prices. They have roll up their sleeves and worked to make their homes shine for the periodic showings. Homes are selling…Just not as quickly as they sold in the past decade. So when a Realtor shows a potential buyer a listing, the sellers want it to make the short list of second showing homes.

With years upon years of sellers running the show, it is hard for the average person to understand why a home is not selling. Heck, it’s hard for the average real estate agent. Basically, the homes-for-sale inventory is way up. Buyers have 50-100 homes that will meet their needs. They have become very selective when writing their offers. They want the best deal on a place to call home. Buyers in many cases are no longer buying with just their hearts; their heads are 100% in the game.

Working with both buyers and sellers throughout Anoka County in this changed market, I have noticed some interesting patterns of thinking on both sides of the transaction. Not all buyers or sellers have a firm grasp of what is happen in the real estate market which is causing some misunderstandings and frustration. It is not just in Ham Lake and Forest Lake that these situations arise, in speaking with other agents and several buyers and sellers, these misunderstandings are widespread.

Myth 1~A home with a high DOM (Days on Market) is a “problem” house.
Agents are as guilty of this assumption as their clients. Often in this market, homes just slightly overpriced can sit for months with nothing wrong per say, except price. When the price is adjusted, the DOM is still there, but the “problem” is gone. There are many GREAT homes now properly priced with high DOMs.
Myth 2~ Sellers are desperate and will take ANY Offer.
Everyone seems to have heard of someone who got that great deal on a house. Stories of sellers who needed to sell and gave away the property just to get out are running rampant over the proverbial office water cooler. When I hear a story like this from buyers, I ask them if they actually saw the paperwork. If they have not, I remind them not to believe everything they hear. Contrary to all of the stories flying around, people don’t give away houses. They just don’t. Reality is sellers will accept a fair price for their home based on current market conditions. If a seller has their home priced fairly, they won’t want to come down another $20,000-$40,000.

Myth 3~ Buyers who write “lowball” offers should be looking for homes in that lower price range.
Again, sellers and their agents alike often think that a very low or “lowball” offer on a home is a junk offer. They will often send it back without a counter offer assuming the buyer is looking out of their price range and can’t afford to spend more. Hence, the low offer.

But in many cases, the buyers are not writing an offer at the top of their game. Consider the situation of an entry level buyer in a starter home. It is imperative that a first time buyer not overpay. If their game plan is to sell again in 3-5 years, they will never have enough equity as the market is expected to stay flat for several years. Interested buyers want to start the negotiations at a lower amount and if they believe the home is not priced correctly, it might appear to be a lowball offer. A smart buyer’s agent will submit the offer with a competitive market analysis (CMA) to support the low offer. Sellers receiving an offer with a CMA attached would be wise to carefully consider the offer before throwing it back. The first offer could be the best and only offer a seller will see for months.

The bottom-line here is that we are in a changed market where buyers have a bit of the upper hand. But that doesn’t mean that buyers and sellers cannot find common ground and negotiate purchase agreements that are acceptable to both sides. Agents play a more important role than ever by making certain that clients have an understanding of the market and how their offer or pricing is being perceived. Choosing to work with a professional Realtor has never been a more important decision than it is today.


If you are relocating to Minnesota, are looking for Homes for Sale in the north and east Twin Cities metro area and need help from a professional Realtor, give me a call or visit my website for a FREE Relocation Packet. I specialize in acreage properties! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2007 Teri Eckholm