By Ramy Wali, The Pearl Gates
A buyers’ market should be just that – a buyers’ market. It’s not a fence or a sitting, waiting, delaying, postponing, hesitating, pausing or foot-shuffling market.
In such markets, even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The media have become the stimulating purveyor of negative news and uninformed advice, and buyers buy it all!
Not so long ago, in a sellers’ market, prices were escalating and it was perhaps one of the most difficult times to buy for value, and yet, people were buying like there was no tomorrow. Investors were afraid to lose opportunities by not buying, although the advantage was all going to the sellers.
These days, the market has shifted.Fear is still in the driver’s seat but the tables have turned.
The fear of paying too much seems to be the stepping-stone in many deals. At a time when some should have been afraid of paying too much, they weren’t. Now that they shouldn’t be afraid of paying too much, they are.
If a buyer, seller, developer or a broker actively pays attention, they will know that they can never sell at the highest peak, or buy at the absolute bottom. Logic says that you cannot predict the ideal market time to buy at the absolute best price or sell at the highest price.
Simply put, buyers will never be able to know that the prices were low until the prices go back up, but then, they have missed that window. Alternatively, sellers won’t be able to know that prices are around the top, until market prices start to decrease.
There are some indicators that will help point the direction in which a market is going and can indicate how far market prices have fallen or risen. In other words, perfect timing is luck.
Playing in the Safe Zone
The safe zone is where shrewd people plan to buy and sell. Anyone who buys at the top of the market is just unlucky and anyone who buys at the bottom of the market is just lucky.
People who purchase in the buyer’s market are buying in the safe zone and are not greedy. They know they can’t predict the end of the bust, but they can see when the market has considerably fallen. They can’t see the end or the speed at which it will climb afterwards, so they focus on what they can count on.
People who attempt to predict the bottom in a buyer’s market are essentially undecided while wondering, have we hit the bottom yet?
The real players in the market aren’t trying to predict the bottom but are trying to buy smart, because they know that it’s a matter of luck not planning.
Buyers in a such market are looking for a sound decision with predictable results and therefore ask the question “have market prices dropped enough now that we can make a decision on a purchase?” More often, when they are asking this question they are already in the safe zone and the answer is yes. These are the real buyers in a buyer’s Market.
Investors need professional advice in a changing market more than ever before. The challenge is that most do not realise it. They have read the newspaper, magazines, listened to the news, talked to some friends and family members and formed an opinion.
They believe they have got the entire story about the market and how to approach it. They believe they are fully informed, but they are not.
The media rarely tells the whole story , and most people have limited experience. As a result, they are either half informed or misinformed.
Most people allow their level of willingness to be greatly impacted by the perception of others about the market. Our goal is to round out their economic understanding and market knowledge so they have a complete picture.
A buyers sense of the market can become a tailwind that drives them forward or a headwind that stops them cold. Some people look like investors because they are able and ready to buy, but then you find out that instead of willing to buy they are waiting. Their perception of the market is to wait.
You must help them understand that it is the right time to buy not because it benefits you but because it benefits them. As an expert, you can teach them about realistic economic expectations. They can’t sell high and buy low at the same time.
The extreme mobility of buyers today has led to some unrealistic expectations. It is a case of people wanting to bend market reality to reflect their mobile lifestyle. Somehow, many people are led to believe that they can buy and sell every three to five years and make a gain on both sides. This economic idea is unrealistic. Any successful real estate investor will tell you that real wealth will come from the combination of any appreciation plus debt pay down.
If they sell and then buy during a “seller’s market” they will get more when they sell then pay more when they buy. When they sell rather than buy in a ‘”buyer’s market’’ they will get less from their sale, but are able to make it up with a saving when they buy. In the end, home ownership is best viewed as a long-term investment, just like a stock market or any other sound investment.
Markets always favour one sector over another. High times are for sellers and low times are for buyers. People hesitating to buy or sell will allow time to pass and miss opportunities.
At the end, your ‘buyer willingness’ is about expert knowledge of the market, and careful consultation on their personal needs. As a professional estate agent, you must communicate the economic and market facts, every chance you get. In a buyer’s market the presentation of facts on the market generally adds up to a powerful argument to buy now.
This article was first published in Trends Vol. 2
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