Hacienda Real Estate Blog

The Normal Marketplace
May 26th, 2010 11:24 AM

The most frequent comment I hear from people is "Wow, there are alot of properties on the market now".  My favorite reply, is: "Hey, back in 1995, which was a normal market and almost five years beyond the tough market of 1990, there were almost 400 units available in Lamorinda. Today, there are under 280 units.  When the market was so hot in 2005, the total inventory of homes only got up to 150 to 160 units.  As a result everything sold, even properties in a poor location, poor condition, etc. had a buyer waiting for them.

The market now is back to normal, good real estate gets a whole lot of attention and properties that have inherent flaws, poor location, condition, problems, poor price, seem to never get sold. This is precisely why, what a buyer purchases is so important.  Many buyers get bad advise, or more typically, no advise as to value. I have heard many realtors say, "i don't make a comment about the price, I let the buyer decide".  I acknowledge that pricing is not an easy science. Pricing is very difficult to establish when there are not many transactions and properties often are difficult to compare. In other words a few sales don't make a market. What one potential buyer might be willing to pay for a particular property is vastly different than what many buyers might be willing to pay for a particular property.  Price is a critical element for any property.  The right price can generate action, even on properties that are not desireable.   In the "normal" market, buyers are back to being buyers. They take their time deciding on purchases, move up buyers are only motivated by the right property.  Accordingly, a great piece of real estate will get multiple offers today (unless the property is horribly priced...which does happen quite often).  The market is littered with properties that might be 25% overpriced, these are the ones that sit and sit on the market.  History has shown us that if a property is overpiced by 10%, it will not sell, and often it will not even generate a low offer.  In the normal market, properties that have limited desireability, better be priced well, or these homes will not have a chance of selling.  There also are poor property purchases today.  Again it is difficult to understand value in real estate, but it does make you chringe when you see a listing that is greatly overpriced and then you see a pending sale, a sale from only one buyer who probably got some bad advise...or no advise relative to pricing.

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Posted by Michael Miller on May 26th, 2010 11:24 AMPost a Comment

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