During the high octane days of real estate that just ended in the last 12 months, everyone was “in the game” and some got a false sense of confidence via “The FSBO”, or for sale by owner. The market in many parts of the country has slowed considerably, and in some parts, even reversed with prices both ask and closing being reduced sharply. The consumer is usually the last person to discover this due to their limited exposure to the day to day activities in the real estate market place. As a result they believe that even though the market has slowed, the appreciation of real property is still going up at a continuous trajectory.After having their properties languish at the old and sometimes overpriced level, sellers start to look for any reason to blame anyone and anything except the price for not selling. Hanging on to this form of behavior is similar to what caused manyinvestors to lose all their profits in the stock market crash at the end of the Internet bubble. The old adage that there is never a bad time to take a profit is still time tested. If the consumer only realizeded that by lowering the price on their current property, they could free up capital to buy the next deal at a better rate. Unfortunately, it takes time for the consumer to get over the denial of a changing market, acknowledge it and adjust.
A seasoned broker is more of a necessity now than ever, given the current real estate market conditions. On a positive note, the stock market is strong and rates are still attractive, but many residential real estate investors are placing properties on the market and not reinvesting in new real estate. This is what is adding fuel to the fire, in some areas. The average consumer does not have the tools necessary to compete in this marketplace, and will find that the “for sale by owner” does not perform the way it did when all the investors were buying without care in the last “up market”, due to the fact that appreciation would make up for any overpaying or mistakes.
Only time will tell. The market will bottom, perhaps when prices stabilize, and buyers begin to see broad-based value in real estate once again. With the exception of the Hawaiian Sea Mount, no new land is being created and the intrinsic value of real estate will always remain a scarce commodity.