Much can be learned from history if you just stop to think during these fast-paced times. We suffer from information overload, job fatigue and economic disasters. History tells us that time corrects most and moves beyond that which cannot be corrected.
What is most important, according to my grandfather, is that we learn from history. History repeating itself can have dire consequences. It is as if to say that the definition of insanity is doing something the same way over and over and expecting different results.
Real estate is no different. We have been in good times and bad. A question often asked to me as a Realtor is, “Is it now time to sell…or buy?” My answer is always, “Do you want or have to sell…or buy?”
The market is always here to enter regardless of whether it is hot or cold. Market value is market value. Historical significance holds the key to the future. Whatever market we currently find ourselves in mirrors one from the past and will be mirrored in the future. You cannot will something to change. Laws of nature and economics are not as flexible as one would choose to believe. Let’s take a look at a time when, as my friend Art Kleimer likes to quote, a great King tried to use his power as a leader to change what is destined to remain the same.
Do you remember the tales of King Canute commanding the tide to stop? Yes, there are two tales, each describing the same event from an opposite perspective. Each tale has the same moral.
King Canute was a real person who conquered England in 1016. One tale describes him as very wise, the other as very vain. Clearly the two tales describe the original political views of King Canute chroniclers.
In the wise tale King Canute is upset by the sycophantic behavior of those around him. In the vain tale he believes the sycophants’ hymns of praise. King Canute tells his court to put his throne in the sea on a rising tide. The tide despite the King’s commands overwhelms him and he has to be rescued.
In the wise story King Canute teaches us that we are all powerless over the forces of nature. In the vain story, King Canute learned the same truth the hard way. The real wisdom is to always know that we can only control ourselves and not others or the laws of nature.
In real estate this understanding is critically important to success. It does not matter if you are a buyer or a seller. The only person you control is yourself. As real estate success is based upon two or more people coming together for mutual success, it is important to remember this rule.
Hot markets, cold markets or flat markets, real estate is always being bought and sold. Hot markets, cold markets or flat markets, the sales always consist of the crème de la crème values. The best values are the properties that will be sold.
It is a law of the marketplace that most consumers recognize the best value. Typically this recognition is widespread and causes a frenzied atmosphere among buyers. This “simultaneous” recognition is great for the seller.
When it is clear which real estate is the best value, the value increases due to demand. Think of the new great toy offered this holiday season. There is a stampede for buyers prior to the holiday with diminished interest come the New Year. It is no different in the housing market.
Buyers expect to be in multiple offer competitions in hot markets. They understand that by definition there are many buyers chasing fewer and fewer properties. What buyers forget is that even in cold markets, ice-cold markets, if there are only two buyers chasing one property, they are in competition for that property.
If the buyers are going to achieve their goal of buying that property, they have to act immediately and with a meaningful offer. Once the property is under contract, the race is over. They cannot call for a redo. The buyer cannot go and buy another identical property because it does not exist. Real estate is unique. Even in a tract home development each lot is unique, even if the house on the lot is not unique.
I am a cautious person. I like to think about my decisions, all of my decisions. I encourage others to do the same. Haste does make waste. In real estate it is important to think about your decision to buy or sell before you start the process!
In my early years I watched too many buyers think about buying after they found their perfect dream home. While they were at home sleeping on the idea of buying, another buyer was buying their dream home right out from under them!
For the past 26 years I have always asked a buyer: “If you find your dream home today are you prepared to buy it?” Any answer other than a clear yes I interpret as a no and we make a plan based on their present state of mind and commitment.
I do not ask the question to be pushy. I ask the question out of a sincere desire to help the buyers crystallize their thoughts and plans. Often one spouse has a far different plan than the other. The question eliminates marital discord.
Sellers are in the same situation. I will ask the sellers: “If today¹s potential buyer makes an offer, what is the sales price you will accept today?” If the seller is not realistic about the market, we talk about trying to command the sea like King Canute.
Sellers love to have a bidding war of buyers for their property. What sellers always forget is that every day they are in a bidding war with all other sellers in the market that day. Sellers are always in a bidding war!
A buyer can lose out to another buyer while “sleeping on it.” A seller can lose a buyer to another seller while “sleeping on an offer.” Hot market, cold market or flat market everyone is in competition.
If you want to be successful you must have your action plan in place. You cannot command the market to stop while you sleep on your plan. You cannot command your competitors not to take action while you sleep on your action.
To be successful in real estate or in life you must adopt the Boy Scout motto: “Be Prepared.” King Canute could not stop the tide and you cannot stop the real estate market place.
If I were king, my one thought would be to turn common sense into common practice. If an offer comes on your property in this market, take time and evaluate the long-term affect of turning it down. It may be your only offer and the price you turned down is the price you just bought your property back.
If you are a buyer, take advantage of the rates and large inventory. Do not negotiate yourself out of a home for the sake of a few thousand dollars. The market will rebound and values will increase.
Oh, wait, one more thing. If I were king, those who can remember when there were no cars would not be permitted to drive them. Listen to your new king…it’s the right direction.
