My colleague and I have long pondered the uncanny similarities between the housing market and the dating market. Let’s face it, in our neck of the woods, both are dog-eat-dog, and both are rife with broken promises and disappointment. If you can’t relate, then you have not been in the game, either housing or dating, for very long. Last night, he called me to vent about recent transactions on the listing side – dealing with fickle buyers, lamenting that home selling is akin to dating and feeling that his seller is like the prevailed upon “female” in the equation. In the interest of political correctness and to assume a broader scope of relationship roles amid the LBGTQ movement, I will refrain from role assignation to any particular gender in this post.
But he is absolutely right. To be specific, buyers are the relationship aggressors. They are the hunters, quite literally, and on the prowl for that hot property: the one they want to bring home to mama and walk down the aisle. In the face of multiple offers and a competitive environment they will offer the sun and moon, dropping contingencies, writing love sonnets and sob stories to the homeowner, offering touching family photos of themselves and shoving their adorable kids’ mugs in the sellers’ faces. If they don’t have kids, they will pose with the dog, the cat, the bird and the in-laws. They will bite their nails and lose sleep, like an eager lover longing for their beloved. If their offer is accepted above others and they are the winners, they experience elation and drunken giddiness! They are hunters, and as such, they value healthy competition. It validates their choice as the best. The inspection is often performed without a hitch. Minor flaws are overlooked at this stage. The awareness of other potential suitors breathing down their neck just waiting for them to overstep their bounds in making repair requests is as keen as the chemical euphoria that overtakes a new lover’s mental clarity. The main reason agents urge their sellers to price competitively in this market is for this very reason. Inventory is so scarce that anything priced well will be snatched up immediately, amid multiple bids. And that environment produces the earnest lover, the one that will accept the house wholeheartedly, flaws and all, and will be proud to march it down the aisle, never once feeling they left money on the table. However, on the flip side, as in the dating world, buyers – the aggressors – also tend to be fickle, particularly when their prey is too easily caught. When a buyer’s offer is accepted without a struggle, without a counter, it’s akin to the seller dropping their panties on the first date. The buyer will start to look the gift horse in the mouth and wonder what’s wrong with it since it IS so easy. Where there is no competition, no higher offer to validate the buyer’s choice as optimal, that choice will start to lose luster. Is it really the best? That inspection will be brutal, as the buyer searches for reasons that other buyers must’ve bypassed the home, resulting in a punch list of repair items or exorbitant credit request. Easy equals desperate, and desperate equals a house that no one else wanted, otherwise it wouldn’t be so easy to obtain it in the first place. Buyers in these circumstances will often drop out of the race all together, and sometimes come back in for a one night stand, tormenting the eager home owner who just wants to move onto the next phase of life. Sellers in such turmoil will bombard their agent with phone calls asking if they’ve heard anything from the buyer, like a desperate lover obsessively checking their phone for missed calls, grasping for a shred of hope that they have not been abandoned. The only saving grace for a seller is another offer, but as in dating, when you are desperately seeking it, it evades you like nothing else. A house that has been on the market for a while is generally off the radar. A stale listing is like an old maid. It may be a good catch, but if so, why hasn’t a buyer snatched it up already? Few buyers consider that the seller has priced themselves out of the market – the dating equivalent of being unreasonably particular. They just assume something is wrong with the house, and that is why it has been sitting there for so long. We all have that perpetually single friend that will only date supermodels but looks like George Costanza. This is akin to the raised ranch that wants to price like a colonial just because he has the same square footage. And the seller that refuses to listen to reason and price appropriately will inevitably find themselves buyer-less for a long time, until they are forced to settle for a much lower price than they would have had they priced appropriately right out of the gate. They are literally paying the price for being stale goods!
The house that has been sitting and waiting for a buyer, is primping, preening, bending over backwards to accommodate last minute showing requests, and generally comes across as desperate, no matter how viable it may be. And let’s face facts, the real reason that home has been on the market for as long as it has is that it is overpriced, at least at first. Now that it’s sitting there for 90 days with two price reductions, it starts to become rather antsy that it will never find a spouse, and that’s when the desperation starts to ooze. When the home is shown to prospective buyers, the buyers’ agents will be harassed by the listing agent for feedback. And when solid, honest feedback is offered, the agents will become edgy, ornery and defensive. “The backyard is too sloped for your buyer? That’s ridiculous, they raised three kids there and never had any issues.”
I could pick on the overpriced home all day, but it is also the case that a home is well priced, with healthy activity and still suffers the effects of the fickle buyer, particularly when dealing with a first-time home buyer. The first-time home buyer is like a young, spry 20-something that has never really been in a committed relationship that demanded much besides a regular phone call every night. Now they are in the market for a spouse and it’s a little scary. A lot more is expected of them, and it’s a big obligation. Only the foolish first-timer goes into the housing marking without some sort of trepidation. And it is the homes that are priced in the first-timer buyer bracket (<$600k in our market) that bear the brunt of buyer capriciousness. It is a LOT like dating in your 20’s. One day you’re hot and heavy and the next you haven’t heard from him/her in a week. As a homeowner, you can be painstakingly negotiating for two weeks, spending hours on the phone and over email hashing out minute inspection issues, and finally get to contract signing, at which point the buyer refuses to sign. Meanwhile, the home has a published an “accepted offer, contracts out” status on the Multiple Listing Service, effectively discouraging showings from other prospective buyers and killing time on market. The next thing you know, the buyer’s agent reveals that their client has moved onto another house. That two-timer went out and made an offer on another property while working things out with this one! Turns out, they were like a deer in headlights for the inspection, only propelled forth by their family and perhaps significant other. But the thought of committing to an imperfect home that required any sort of maintenance made them wake up in the middle of the night in a cold sweat. Of course, once they shell out another $1,000 on another inspection (or set of inspections), it will be quite the sobering realization that ALL homes have their own litany of issues and require similar levels of maintenance.
For the buyer, it is often the case that they lose out on so many homes that they become priced straight out of the market. With low inventory and high buyer demand, home values are on rapidly on the rise, and now so are interest rates. Purchasing power is diminishing by the second, and the tables will soon turn for the fickle hunter, who is now forced to settle for less than he/she would have a few months prior.
So what is the solution? I give the same advice to my sellers that I give to my single friends… don’t put all your eggs into one basket. In the words of Beyoncé, “if he likes it then he better put a ring on it,” and until that happens you are fair game. The “accepted offer” or “in a relationship” status is reserved for those buyers moving along at an earnest pace. If there are any hesitations and hiccups, keep right on moving, there are plenty of other fish in the sea. Understand that the second there is a disagreement on terms or price, you no longer have an accepted offer. Until inspection is done, you do not have an accepted offer. Until you have buyer attorney information, you do not have an accepted offer. Make this clear to the buyer, so they understand your terms. We are in a treacherous marketplace, in which an accepted offer is as good as a spit and a handshake. An offer is not truly accepted until a contract is drafted by an attorney and signed by both parties. Until that point, both parties can renege on a deal penalty free. But it is a seller’s market, and as such, seller’s need to use the idiosyncrasies of our quirky and unusual state to their advantage. There is no need to settle for less than you deserve. For those fickle buyers out there I advise the following in this competitive market: keep chasing that tail and there will soon be no more tail to chase. If you don’t make a move soon, your dream of home ownership will be just that, a dream.