I’ve had the DTR conversations with several of my buyers lately…DTR meaning, “Defining the Relationship” between the buyers and the current real estate market.
Lots of buyers feel like the market has turned their back on them. They loved the relationship from years past…tons of inventory, negotiating so much that sellers and banks walked with their tails between their legs to the closing table, and thanked the buyer for choosing their house and giving them 80%of asking price. What happened?
After many years of choices, the inventory has declined and buyers now must be ready with their approval letter or proof of funds in hand, combined with an above asking price offer with little contingencies for a seller to even look twice at their offer.
As an example, over the weekend, I listed a property, and I listed it right at my CMA (Comparative Market Analysis) recommended price. The weekend produced 11 showings and almost as many offers. The seller and I decided to put a two-day offer deadline on the property…nine offers later, the seller settled on an above asking price offer that was best for him and his situation. I fielded all sorts of calls from Realtors…one Realtor even said “my buyer refuses to pay above asking price.” I chuckled to myself. Why is this the standpoint the buyer has…are they trying to woo the market of 2010 back to them? It’s not going to happen, at least not now. The rules have changed, and offering above asking price does not mean you are overpaying for a property, it means you are setting the value for the property.
It’s time for buyer’s to change their thinking…and it’s time for sellers to realize now is their time in the market. The prices have taken a beating over the last five years, and a housing recovery is what we all wanted, so let’s embrace it with open arms, shall we?
Knowledge is Power. Look at the below graph showing our inventory over the last five years…
Inventory in September 2007 — 21,225
Inventory in September 2012 — 5,521.
We’ve seen a market shift, and it’s a good thing.