Thursday, February 26, 2009

BFO (Blinding Flash of the Obvious)

I've been telling you for months that this is the best buyer's market we've experienced in years. Well, Dear Readers, I was wrong.

In fact, this is the best market for sellers as well! Why? It's so obvious I've been blinded. The conventional wisdom about markets derives from Adam Smith's "Buy low, sell high." But that wisdom depends on certain knowledge of prices. Every day the stock market advertises prices. The stock market is volatile, and buyers can base their decisions on hard data.

But the real estate market is different. In the words of one wag, "A rising tide floats all boats." And a falling tide can ground them. Unlike stocks on Wall Street, there are no obvious daily winners and losers. When the real estate market tide is high, all homes increase in market value. And when the market tide is low (this year), all homes decrease.

Think about this: most sellers become buyers, whether to buy up or downsize. The only sellers who will find this a poor market are those who are unrealistic in their expectations. Any seller who understands the market will come out ahead.

If Mr. and Mrs. Seller accept the fact that their home will not bring a 2005 price, they can be comforted by the fact that no other house on today's market will, either.

If Mr. and Mrs. Seller accept 10% less than they had hoped, all they need do is buy their next home at 10% less. If they "lose" 10% on their $600,000 home, they will gain it right back when they get their next home at the same "loss."

Think about it!

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