You Are Not Smarter Than the Market

There are an infinite number of ways to say “don’t be stupid”. You can tell a kid “that stove is hot” but unfortunately, many times the lesson isn’t learned until that kid gets a third degree burn on his hand. Here’s the real estate equivalent warning – “You are not smarter than the market”.

In the last two weeks, two sellers tried to out flank the local Atlanta real estate market; they are now both licking their wounds and realizing that they made major mistakes. We listed both homes and within 24 hours – 1 single day – each had a no contingency offer, 30 day close and both were 95%+- sale to list ratios. Other than a few administrative tweaks, I assumed both of these sellers would be breathing rarified air; this is unheard of. But – obviously – both fumbled the tremendous gift they were handed and each sits empty handed. One got greedy and wanted full price the other hung up over a, they believed their own reviews; they didn’t listen and didn’t acknowledge the data.

My sellers have no doubt about the current Atlanta real estate market, and this applies to other markets as well. In this market, sellers must acknowledge several key things; many can be hard to swallow. But this is business and any agent or seller not considering it as such is misguided. Sellers need to know that:

• Your home is worth what others like it are selling for. No one cares what you think, what you paid, what you put into it or what “you need”.

• Your home better be well priced, if not it will die on the desk top.Buyers and agents are using the web more and more to complete pre-inspection research. At $4/gallon, the days of wasting time and money driving around looking are “nice” homes are over. You won’t get an offer if the door doesn’t open – no matter how “great and special” your home is.

• Eddie the Appraiser is angry.Angry at reduced fees, increased requirements, increased cost of data, $4/gallon gas, less work and constant battles with underwriters and agents. Eddie’s goal is to get in and get out and get your appraisal off his radar. The result? Typically lower quality reports that are hastily prepared – and they can cause issues for sellers if proper data isn’t there to support the contract price.

• The buyers out there know what they want – and in my experience, when it pops they will move on it. A well-presented, well priced home will attract attention when listed. My buyers have searches set for areas they like – emails are sent from the MLS when listings meeting their criteria appear. When your home hits the market, the first two weeks are critical – typically most of the action will come in that time. After that, it slips into the mix and becomes one of many and it’s harder to stand out.

• Your first offer may be the best offer – and the only offer. Every offer must be considered and negotiated no matter what you think of it. Sellers must have a definition of success before a contract is received – take the emotion out of it and treat it like business. In these cases, both families received offers ABOVE their definitions of success.

• Trust the data and trust your agent. Smart clients research their agent and only use full time experienced pros. Understand and ACKNOWLEDGE the data – if you have to sell, then sell. If you don’t have to sell, then don’t “test the market” – you’ll fail that test. If you’re in a distressed situation, then seek appropriate guidance. But don’t think you’re smarter than the data.

The bottom line is that this is a real estate market unlike any other – ever. I eat and sleep this business both as a FNMA appraiser and real estate broker, I take nothing for granted right now. If you’re a seller and you get an offer – any offer – do your best to get it done. Consider the bullet points above and above all, don’t think you’re smarter than the market.