Wait at Your Own Risk

"Should I buy now, or wait for a better deal?" This question probably gets asked more than "when is the market going to turn around?" The reason is obvious: Buyers don't want to pay too much. Many people, and unfortunately some in the real estate profession, question whether buyers actually exist in today's market. The truth is that the real buyers never left. It was the sellers who left the buyers behind. It's funny how five years of double-digit appreciation will do that.

Trust me, there are buyers out there. If you don't believe me, ask a seller to cut his listing price in half and then sit back and watch the activity. It would be like fishing at a trout farm.

The great thing about our market, and a key point to remember, is that we do not have a demand problem, we have a supply problem.

I know that the majority of buyers are thinking that the longer they wait, the lower prices will go. This attitude removes a key ingredient that motivates people into action, and that ingredient is urgency. I want to address this issue because I believe I can build a strong case as to why buyers should be acting now-or at least soon.

First of all, to state the obvious, there is an oversupply of homes and condos for sale, which means it's a buyer's market. But that is not the only major factor in the buyer's favor. Oversupply is a fact, but facts alone do not necessarily override emotions, and emotions play an integral part in most residential transactions. The emotions I refer to are fear and hope. Sellers will fear that the market is going to get worse or hope that the market is going to improve. Sellers will act according to whichever emotion is dominant at the time.

For example, inventory has been in the buyer's market range for about a year now. However, I am just beginning to see that sellers are realizing that fact. They are coming to grips with the reality that many agents have been preaching for months. This then provides the perfect time for buyers to step in and capitalize on that fear. Sellers who were deep in their foxholes and holding out for pre-buyer's-market pricing are starting to wave the white flag and surrender. This creates a great buying opportunity.

Will a better buying opportunity exist in the future? Maybe, but the risk a buyer faces is waiting too long, because emotions can change quickly. They say that the first sign of correcting a problem is admitting there is one. For the first time I am seeing sellers stand up and say, "I am a seller and I have a problem." This is the first step toward the market improving. As the market improves, the sellers' fear will be replaced with hope, which will make them less negotiable.

I understand that buyers want to wait until the prices have bottomed out before they sign on the dotted line. I hope their crystal ball is working because that sort of thinking drove some sellers to failure. They wanted to sell at the peak of the market, but the problem was that the peak occurred five months before they realized it. And once the market headed down, everyone rushed in to sell before it was too late. It already was. The same thing will happen to buyers. They will feel they can time the market just right, but they won't succeed because market momentum will change rapidly. Those who do will be using the same skill necessary to pick a winning lottery number-luck. The rest of the buyers will wish they had taken advantage of the market when they had the chance.

I believe that we have a backlog of buyers wanting to buy but choosing to wait. As soon as these buyers begin to buy, and they will, the trough will be established and the market will quickly move toward equilibrium. This will happen so quickly that most buyers will not realize it until they see the sellers lowering their white flags and heading back to their foxholes again. When will this happen? If I were better at picking winning lottery numbers I'd tell you. The only thing I know for sure is that sellers are willing to deal now, so take advantage while you can.

Denny Grimes, CRS, ABR, M.B.A., is pres-

ident of Denny Grimes & Co. in Fort Myers. Contact him at denny@dennygrimes.com.