At some point, we can’t blame sellers for everything that troubles the housing market. It’s time to give buyers a wake-up call – and tell them that whatever’s holding them back, it’s time to get over it!
It’s fashionable to point out how home sellers are unrealistic – in this, or any market. Traditional real estate lore contains countless stories of sellers who think their home is “special,” not subject to market forces that sometimes sweep away equity and exceptionalism. Many such stories may be true, but to the extent that today’s buyers are still hesitating, even smart sellers have to scratch their heads.
Which is why smart REALTORS need to to kick their buyers in the butts.
In case anybody hadn’t noticed, now is probably the best time to buy a home since the invention of wood. Mortgage rates at historic lows, home prices reset back almost a decade, and a weak economy pushing down the costs of buying (moving, inspecting, repairing, etc). It’s simply the perfect example of a classic “low” in a commodity market. Yet even in stable neighborhoods, where prices never soared and likewise didn’t plummet, buyers are waiting.
Many buyers today will tell you they’re waiting because they’re afraid their purchase will lose value in a few months or a year. The trouble is that most REALTORS have been trained to handle this objection by talking about how great a long term investment buying a home is, or what a smart savings vehicle it represents, or some other such investment speak, when what they really should say is:
So what? It’s not like you haven’t shown you’re willing to buy other things that have lost value, right?
What today’s buyers need is a dose of realism. Almost everything they have ever bought has lost its initial value. Fancy new car? Loses thousands the second you drive it off the lot. Super new smartphone? Put it on Ebay in two months and see what it fetches. Designer clothing? Worth nothing at the yard sale.
Buyers are surrounded by their everyday purchases that have lost their initial value; they still bought them and they got over it.
The real estate industry has caught itself in a trap of its own makings. After telling people for decades that housing was a great investment – the jury is now out on that in consumer’s minds. Today’s buyers are trapped in a thought process that is causing them to hesitate: What if today’s purchase isn’t worth “more” at some point in the future? Even if homes still are a good financial investment by certain spreadsheet calculations of future points in time, what matters today is that Gen X and Gen Y consumers simply don’t believe it. They are hesitating because they can’t predict the future.
But maybe we can get them to act by pointing to what they have done in the past.
Most buyers have never cared about how much money they lost on past purchases; they bought the car, computer, vacation anyway. That’s why it’s high-time real estate agents started telling buyers to get over it. So what if it’s possible the home will be worth less if measured a year from now? Most buyers won’t be flipping it within a year. It’s a fictional problem! No real loss will occur. Their down-payment equity (if any) will be trapped anyway, because no bank is going to let them pull it out ATM-style ever again.
It’s housing; live in it, pay for it, get over it.
REALTORS better disabuse buyers of this non-problem soon, too. If market conditions change, it’s not going to be for the better any time soon (can you say unemployment, inflation, flat income gains?). Agents can help their buyers move forward in two ways: First, stop talking to them in investment speak, about prices in a future you cannot possibly predict. Second, gently point towards their buyer’s car, shoes, smartphone and kid’s’ college education: Remind them that they were perfectly happy losing money on those purchases.
Why stop when it comes to buying their home?