A good time to buy? It depends
Realtor Notebook
By Teresa Boardman, Thursday, July 3, 2008.
It is hard to imagine or understand, but not everyone trusts real estate agents or Realtors. According to a Harris poll, 20 percent don't trust us at all and only 7 percent trust us completely.
As an industry we shoot ourselves in the foot when it comes to being trustworthy. Examples include the press releases and other information from the National Association of Realtors (NAR). NAR is a huge trade association and exists to promote our industry. As such, NAR likes to put a positive spin on buying real estate.
In the land of NAR it is always a great time to buy real estate. The truth is it isn't always a good time to buy real estate, not every market is the same, and not everyone who can buy real estate should be buying real estate. In recent months NAR has started telling consumers that real estate is local, which is true.
Some real estate companies and agents like to make general statements, which are misleading and breed distrust. One company had signs up all over town advising buyers not to miss out on this great buyer's market. It sounded like a kind of cheap salesman's trick -- they were saying, "Hurry and buy now before they are gone." They also give their agents seasonal marketing materials with messages for every season outlining why it is the best time to buy or sell real estate.
Instead of just publishing numbers and statistics, as an industry we like to put a special spin and paint a rosy picture of the housing market. The general public sees right through it. We are treating them like idiots when we take the numbers and weave them into a fairy tale that ends with: They bought real estate and lived happily ever after.
We should be saying that real estate has appreciated but past performance is no guarantee of future appreciation, and that there are tax advantages to home ownership, emotional advantages, and we all need a place to live. When I am asked if it is a good time to buy, my answer is and always has been the same: It depends.
For people like me, it is a good time to buy and sell real estate. Owning a home that is almost paid for has advantages. It could be sold quickly, because it could be priced for 2008, not 2005. The proceeds could be used to buy another home, and as a Realtor I know where the bargains are and how to negotiate a deal.
For my neighbors two doors down who bought a townhouse three years ago, it is a bad time to buy real estate. They would take a loss if they sold, as it is worth less now than when they bought it and townhouses are the hardest type of housing to sell in my market. I would advise them not to sell, and if they have to leave for some reason they should consider renting it out.
As an industry, when we make general statements to promote sales we are not promoting sales -- we are instead breeding distrust. Do we expect consumers to trust us when the foreclosure rate has gone through the ceiling and we are still telling buyers that now is a good time to buy? Apparently, for some who bought it the last couple of years it was not such a good time to buy, yet we still repeat the same old message. It might really be a good time to buy real estate, but it depends.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog. Boardman will speak at Real Estate Connect in San Francisco, July 23-25, 2008. Register today.
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Submitted by Joe Manausa on July 3, 2008 - 4:13am.
Nicely written Teresa and I agree completely. Too often, our industry puts the "spin" on current market conditions when instead we should be offering counseling based upon individual situations and individual needs.
Keep up the great work.
Submitted by RK Ruthman on July 3, 2008 - 5:26am.
I agree that it is a good time to buy in some cases. My philosophy is, to see if you can negotiate the property to "next year's price", and get this "year's interest rate".
I too am a Realtor."...as a Realtor I know where the bargains are and how to negotiate a deal." I listen to the buyers, and keep my ear to the ground to see what is coming on the market.
This week, I sold a home that was on the market for 1 day,a great house, area and price(original owner - never on the market before). I insisted my buyers go see it that same day. We made an offer sitting at the dining room table, and two other offers also came in. Our offer was accepted because my buyers were "pre-approved", beating out an offer that was $7000 more.
Having someone who cares about what you need, and not just, "it is a great time to buy" makes a big difference in any market.
Another buyer I am working with works for Bloomberg. He shares business articles, and keeps me informed. I love having conversations with him. We are still working on finding that "right house at the right price." He trusts me, and that is what I value.
Submitted by Phil Hoover on July 3, 2008 - 5:50am.
Very well said, Teresa.
If we take care of our clients, everything else takes care of itself.
I agree that the NAR mantra is almost embarrassing because it sounds so self-serving.
Phil Hoover
Submitted by Sam Chapman on July 3, 2008 - 6:01am.
Now is a good time to buy in Austin. Builders are practicly giving new construction away and they are not starting new specs. When the new inventory is gone, there will be very little to replace it, which will put pressure on resale homes. So when the deals are gone and the demand for resale is up, prices will rise. Builders putting up new construction will sell to-be-built and they won'nt discount the homes. Also, interest rates are up and may rise more. All of this tells me that people on the fence about buying in Austin need to act now.
Site Austin real estate.
Learn about Lake Travis real estate
Blog Austin Real Estate Blog
Submitted by Richard Greenwood on July 3, 2008 - 6:55am.
Saying that it is a good time to buy real estate is like saying that aspirin is a good medicine. It may be a great medicine for a headache but it might hurt you if you have an ulcer. Broad, self serving "NOW IS THE TIME TO BUY' statements just further deprecate any credibility we have as professionals. Why don't we share the FACTS and help people solve the problem of finding a suitable place to live.
http://GoneWithTheWeb.com
Submitted by Mark Eibner on July 3, 2008 - 7:24am.
TBoard- Killer Post- Yea NAR is not too transparant are they! But since they collect our dues that have to spend it on something! For people in or coming to Denver it is a good time to buy. Builders are and have been giving new construction away and they are no to minimum specs. When the new home inventory is gone it will put more pressure on our resale market. Shortsales and REOs are moving with great demand. So when the deals are gone, the demand for resale will go up, prices will rise. I have had numerous sold in 1 day properties and of course got beat by other buyers on contracts to buy....you never here about THAT from MSM. Rates are still great, Denver never really gained much over the last 10 years other than COL. Jobs are here, so do the math. It's like the 80' all over again...and I should have bought way more property in the 80'S
Mark Eibner
303.800.1006
www.BrokerIPTV.com
IPTVBoyz
Making you relevant on the net
Submitted by Karl von Loewe on July 3, 2008 - 7:24am.
Very few of my clients have the luxury of buying or selling just because they want to. More often, the are buying or selling because of family, professional, employment or other reasons not entirely within their control. I usually counsel potential buyers or sellers not to try to time the market. It doesn't work in the stock and bond markets (unless you are constantly monitoring those markets), and it is even harder to do in real estate.
The National Association of Realtors® has often been criticized as nothing more than a cheerleading professional association. That's right - NAR helps Realtors®, but also helps the potential homebuyers and homesellers. There are worse activities to lead cheers for than buying or selling a home so you can get on with your life. Essentially, NAR is correct if it states that "now is a great time to buy/sell." If your life requires a change, then FOR YOU it is the right time to buy or sell. "Spinning" just helps those buyers or sellers to better cope with something they may have no control over.
Karl von Loewe, Broker/Associate
Prudential NJ Properties, Hillsborough, NJ
Submitted by Michael Thomas on July 3, 2008 - 10:15am.
ANYTIME is a good time to buy/sell, as long as it's an exchange (and there is hustle to find the right deal with urgency).
I had a nice conversation yesterday with an owner of a large apartment building in Oakland, CA who asked if this year was the right time to sell. The building's cash flow is healthy and it is easy to manage; being that she wants to 1031 into a larger building in the same market with possibly more of a tax shelter, ANYTIME is a good time to sell/buy. If she was simply going to cash out, however, I would recommend holding on a few more years as the market rebounds.
Trading up in the same market when there isn't much slope to the price change in either direction is a winner. With that said, maybe the NAR could include an asterisk next to their spin...
Michael Thomas, Founder
www.wheelhousebrokerage.com
Submitted by Flavia Brown on July 3, 2008 - 10:28am.
A great article because it is the truth. During the current real estate market we are in, every time the NAR states or infers that it is a good time to buy I get embarrassed and ashamed. The NAR should include a disclaimer indicating that their opinions don't represent the majority of Realtors. Most harmful, however, is the mistrust to the public generated by the NAR's misleading statements.
Submitted by Denise Aqila on July 3, 2008 - 11:26am.
Buying and selling real estate has always been specific to the individual's needs. With the negative spin the media puts on real estate it is a good thing NAR puts a positive spin on it to counter some of the negativity. Both sides of every situation have the right to be voiced. Furthermore, every area is indeed different thus the reason Realtors need to know about their particular market. The problem really lies with our licensing. If many of the licensees were more professional and had to have additional education and/or experience before being on their own to work with the public perhaps the level of confidence with the consumers would be higher.
Submitted by Ken odonnell on July 3, 2008 - 11:52am.
As someone who will be buying a home in the 60-90 days this is good info to have.
I tried to keep myself well informed that is why I read this website often. Because the market is not that great right now I need to stay ahead of the game.
It makes me happy that I am working with a newer company called ReLogic who is giving me more than half of their commission back to me when I close. I can help defray some of the costs involved and put me better shape.
Submitted by Tony Gonzalez on July 3, 2008 - 12:13pm.
How would we feel if the NAR came out and said that the real estate industry is in the tank and all buyers and sellers should sit out the next few years? We must keep in mind what their obligation is, and that is to promote real estate activity in all types of markets. It is not their responsibility to assess the particular needs of each and every person considering a real estate transaction. I believe it's our job as real estate prationers to help our clients deal with their individual circumstance. The truth of the matter is that it is a good time to buy real estate for some people and not such a great time for others. I don't think we should kid ourselves into thinking that the public won't see the NAR spin for what it is and should be, industry promotion. I say we should be happy that their focus is on the positive and not the negative. Who's with me.
Submitted by Guy Schwartz on July 3, 2008 - 2:25pm.
Bravo!
We had the same pump and dump with stocks.
How do we short the housing market?
Guy
Submitted by Kevin Crosthwaite on July 5, 2008 - 6:18pm.
Well Done,
As Realtors we spend a disproportionate amount of time trying to establish trust as evidenced in the 2006 Harris Poll. As professionals we should be the "source of the source" when it comes to information and protect our clients accordingly.
Submitted by D. Sullivan on July 7, 2008 - 6:00am.
"as a Realtor I know where the bargains are and how to negotiate a deal."
The objective existence of "bargains" suggests a lack of industry transparency and exploitation of stressed or unsophisticated sellers.
Realtors can buy (and flip) those bargains ourselves. In the aggregate, why should consumers trust us?
Submitted by Marc Blasi on July 9, 2008 - 1:38pm.
Marc J Blasi
Realtor - Leibowitz Realty Group
Mortgage Broker - Knightlines Mortgage Services
www.PalmBeachRealEstateandLoans.com
I've been talking about Local, Local, Local for some time now - if we could just get the mainstream media to focus a bit as opposed to only doing nation-wide or state-wide averages. But if it's not negative, I guess it doesn't sell newspapers.
The truth lies somewhere between the constant negativity of the papers and the always rosey picture put forth by the real estate industry. It's in there somewhere!
As far as the trust problem goes, until the quality (not just quantity) of the education increases, the licencing requirements tighten and the CoE is enforced - nothing will change. Don't get me started on this one.......
Submitted by Sue Harris on July 9, 2008 - 5:28pm.
Sue Harris
Harris Realty of Palm Coast
www.PalmCoastBrokers.com
I do think that in some areas it is the time to buy real estate. I know here in Palm Coast there are a lot of good buys available. You get so much more home for the money now and I am not talking about dealing with short sales. A lot of new home builders here offer a lot of incentives for buying new. As far as consumers trusting in real estate agents, I would have to say that I have personally gained a lot of trust from past and present clients. I am not trying to sell them something that I do not believe in myself. If I wouldn't want it, I know they wouldn't either. Every buyer and seller transaction is different. You need to listen to their needs. Yes, it may become only a couseling session but as a professional where are here to help!
It takes a lot of hard work and commitment to persevere in this line of work. I am dedicated and enjoy helping my clients find happiness in their new dream homes.
Submitted by mark franke on July 14, 2008 - 8:59pm.
You say, "For my neighbors two doors down who bought a townhouse three years ago, it is a bad time to buy real estate. They would take a loss if they sold, as it is worth less now than when they bought it and townhouses are the hardest type of housing to sell in my market."
You are switching from addressing buyers in one sentence to sellers in the next and acting as if there is some logic to this. My logic course from college taught me that statements like this are paridigmatic fallacies. If you mean that because your neighbors would need to sell in order to buy and, for this reason, it is a bad time for them to buy you need to make this explicit. Moreover, a buyer is not necessarily bound by this type of situation and, therefore, even if you made this explicit, this is a bad example.
Of course, a Buyer's Market is not great news for a potential seller. But such logic does not substantiate your claim that is not a good time to buy.
I agree with many other comments that for some it is a bad time to buy (namely, for people who can't afford it/have bad credit given that mortgages are hard to come by currently), but for some (namely, people with savings who can put some money down and get a good mortgage despite the mortgage "crisis") it is a really good time to buy because prices are down. Their dollar will go farther. Moreover, their participation in the market is integral in its recovery.
So, though I respect your aim to debunk fraudulent of misleading claims about the market, I think you need to check your logic. If it truly is a bad time for a potential buyer to buy, you should have offered an example of a BUYER, not a SELLER to substantiate your claim. Because I support your aim to debunk misleading statements, I write this comment.