It’s certainly been my experience

Picky buyers slow real estate sales, And why shouldn’t they?

Exacting buyers are upending the battered real estate market, agents and other experts say, leading to last-minute demands for multiple concessions, bruised feelings on all sides and many more collapsed deals than usual.

It is a reversal of roles from the boom, when competing buyers were sometimes reduced to writing heartfelt letters saying how much they loved the house and how they promised to eternally worship the memory of the previous owners. These days, it is the buyers who are coldly seeking the absolute best deal while the sellers are left in emotional turmoil.

“We see buyers who must have learned their moves from the World Wrestling Federation,” said Glenn Kelman, chief executive of the online broker Redfin. “They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.”

10 Comments

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10 responses to “It’s certainly been my experience

  1. out looking in

    Funny,

    Near the end of 2008 there was this stock that fell all the way down to $80/sh, then bounced up toward $100 before swiftly dropping back down to $80. A really wise investor (he had all the power, as we were in a bear market) was convinced the stock was heading lower, and placed a bid about 5% below that $80 level. the stock shot back up to $100 before dropping once again to $80 in Mar 2009. The buyer was certain this time of his wisdom, and did not come up to lift the $80 asking price. sure enough, the stock steadily climbed, first $5/month, then more swiftly. Today, only 15 months from that afteful day, the stock is now $267/sh. It’s name? Apple..the astute genious investor- a dumb ass….we won’t know the bottom until well after it is in place. And idiots (okay- pulled it out in Old Greenwich?) who passed up on quality properties trying to squeeze out the last nickel will be chasing the market up, forever the underbidder….it happens all the time….what is the old saying?- a fool knows the price of everything but the VALUE of nothing…

  2. Retired IB'er

    OLI,

    Are you seriously trying to draw conclusions between the approach to investing in, and the prospects for, a stock like Apple and Greenwich real estate?

    Personally, I don’t buy it… including AAPL as a value conscious investor.

  3. Depth Perception

    So the moral is buy stocks instead of real estate? No one believes real estate values will echo the recent performance of Apple or GS, and few people will invest an equivalent amount in one stock versus one 06830 or 06831 property. And with so much inventory it is still a buyer’s market. So, short of the promised coming of the money printing dictated inflation – which has to sneak around the unemployment numbers which effectively depress real wages, real estate values and consumer spending, and which, when coupled with zero interest rates still give little pulse to economic growth and only – barely- manage to mask deflation, how can you fault buyers for being stupid , when actually they are being prudent, demanding perceived value for -taxed – dollars. If you are a real estate agent , your arrogance is so 2007! Smart buyers populate the market, and I for one welcome them and their kids to Greenwich!

  4. Anonymous

    Equities involve a rather different value and time mentality vs buying primary shelter, presumably for a multi-decade use assumption

    For most young financiers, probably only anticipate one purchase of a primary shelter (at least in their first marriage), so a different emotional calculus (often outsourced to the wife for various reasons) than any liquid security investment or bet

  5. anon

    Anybody who pays $267 for AAPL is a fool. That company is a comedy of errors. Their system to take pre-orders for Iphone 4 just crashed, but the biggest joke is they still can’t figure out how to make a phone that actually works as a phone and doesn’t drop calls??? That’s why I stick to Blackberry on Verizon…

  6. duff

    Not in every case are the buyers calling the shots. I was just out bid on a multiple sealed bid scenario on a property in Greenwich. I bid full price +.

  7. out looking in

    Boy- You all were hitting the scotch last night.
    The moral of the story is that you will not know the bottom until it has long passed, and will only catch THE bottom with luck. If one has the SKILL to discern value, it’s not important to BOTTOM TICK the price level, but it WILL BE REWARDING to acquire the asset that has value at a reasonable price. And IB’er, with all due respect, if you did not see the value of AAPL at $85 last year (and still don’t see it?), then you were on the right side of the desk for your career.
    In 2001 after 9/11 I jumped into the real estate market in Miami all-in….so many were advising to wait, it was too dangerous yadayada…and many people I know were waiting as well- point is NOT that I am great real estate investor- but simply that I discerned value, understood the local market, and also got lucky…some people I know waited until 2004-2005 to finally take the plunge and buy, when it was CLEAR THAT IT WAS SAFE TO OWN AN ASSET THAT NEVER WENT DOWN

  8. out looking in

    Depth Perception

    Do not underestimate Greenspan’s…um,, er Bernanke’s ability to monetize and debase the US currency. Inflation does not need to “get around employment”- please review the tale of the Weimar…and I am definitely not an agent…the point again is that if one blows a deal for being overconfident and trying to hammer the seller, they will miss out and it does not make sense, unless they are trying to flush out distressed sellers (vultures)

    As one of the Anons above mentions, real estate has many factors that are emotional and “frictional” in nature…my point was to not miss a reasonable deal by attempting to steal it!!

    And anon #2, I was recently short AAPL but covered, because whether you are right about the fortunes of a company no longer matters when you are short- I got squeezed out of two outright FRAUDS by other traders/investors that drank the koolaid…

  9. SlappedAss

    The intrinsic problem I have with comparing an investment in AAPL, and buying real estate in Greenwich is that AAPL is designed as a speculative investment, the other is a functional staple of life.
    Over the last several years buyers have been taught that their primary home should be an investment. Since the average family stays in their home for around 7 years according to NAR data, the chance of a huge return is no longer guaranteed. Buyers should be looking at the functionality of the home first. Not unlike buying a car. The investment part of the equation-will the house appreciate significantly, should not be the primary focus of the purchase. I bought a house in the early 1990’s, during the last real estate dip, my goal was not how much I’d make on the house, but in five years would it still be worth what I paid for it? Ask any upside down, underwater home owner in Florida or Northern California if they’d be happy with a 0% return on their primary home after five years, most would be. The problem is real estate agents, particularly here in Greenwich, have this mindset that buyers are purchasing for future appreciation first, function and fit secondarily. If this wasn’t the case, why would anyone purchase a Greenwich house 150 feet from the busiest highway in the United States? What function does that serve? Why would people purchase homes close to the rail line, or a beat up house under a 95 overpass? Because, one day, soon, they believed, regardless of location, price, condition, if a house is located in Greenwich, it will appreciate. Unfortunately that no longer holds true. Unmercifully hammering the sellers, in any way possible, at any time possible during the transaction is completely acceptable behavior. No different than buying a car. Its the idea of substitution, if you don’t want to sell me this house (car), then I will go and buy one of the many others substitutes for sale. Sellers had a good run, they treated people unfairly, got more money for their property than they should have, and now the invisible hand of the market has turned this to the advantage of the buyers. The age of caveat emptor is over in real estate, not sure what the Latin for the word seller is, but right now “Seller Beware” is a pretty good catch phrase.

  10. out looking in

    Ass Slapper-

    Very well said!!
    And it needs to be pointed out that real estate is a “store of value”, as many unfortunates who have purchased in recent years are discovering….