How the "Buyer's Market" Mentality is Hurting Buyers

By
Real Estate Broker Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

Buyer's market mentality can hurt the buyerI have written before on what a buyer's market is and what a buyer's market isn't. Westchester County and our surroundings are a sought after destination; even if a home has been on the market for a year, once the price is right it will sell. I wish I could impress this upon a few buyers who have lost opportuntities when more motivated people came along and outbid them.  

We recently listed a newer build in a desirable subdivision. While it was a short sale, it was also upscale. Not long afterward, an offer came in almost 15% below asking price, a hefty discount not supported by any other market activity. The rationale? It's a buyer's market!

The seller countered, and the would-be buyer raised their number gradually, but well short of what we thought we could submit to the bank for acceptance (by "we" I mean my seller and their attorney). This went on for weeks. They never came up to the bottom line number we felt we could work with, and this resulted in some frustrated emails and phone calls from the agent. Then even the buyer called me directly. I don't know if the buyer thought they could be more convincing than the professional they had representing them, but I told the person both times that there was no comparable sale that justified accepting the offer. 

"But it's a buyer's market!" I was told. The house has been for sale for TWO WHOLE MONTHS and hasn't sold. I was risking having the bank take the house back if my client didn't take their offer. Furthermore, I was told, they were perfectly happy to wait until the bank repossessed and buy it at foreclosure to get their price. 

How lovely. This actually happened with two different byers on the same house- the same pattern and rationale. 

In each case, I asked the agent to ask the buyer to stop contacting me and go through their rep. 

Not long afterward, another buyer came along and made a stronger bid, which was accepted. They got the house.

Fatal mistake number one: Buyers should NEVER assume that they are the only game in town.  
Fatal mistake number two: A "buyers market" does not give the buyer fiat to set the market unilaterally. Comparable sales matter. 
Fatal mistake number three: When a buyer circumvents their agent and tries to negotiate on their own, they aren't accounting for the fact that they probably suck at negotiation and are hurting their own cause.  

In all three cases, the "buyer's market" phrase was thrown around as if it were some childhood game wildcard phrase that granted immunity from logic or true market forces. And in that buyer's market, the would-be buyers lost a home because they were their own worst enemy. The people believed that if they gave in just a little that they'd "lose." 

Pigs get fat, hogs get slaughtered. 

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  1. Mike Cooper 01/27/2012 11:39 PM
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Topic:
Home Buying
Groups:
BananaTude
Bartender, Make it a Double
Independent Brokerages
Running a Brokerage
"Whacked"!!!
Tags:
buyers market
buyer mistakes

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Rainmaker
204,179
Peggy Wester
Real Estate Agent Ozaukee & Washington County Real
Think Young Team--Realty Executives Integrity

Excellent post -- excellent. I recently had a buyer suggest getting pre-approved wasn't necessary/important because it's a buyer's market and the seller should just be happy to have that buyer/offer. Huh?????

January 28, 2012 06:30 PM
Rainmaker
925,388
Sheila Anderson
The Real Estate Whisperer Who Listens 732-715-1133
Referral Group Incorporated

Good morning J Philip. You never fail to express yourself so well that I wonder why you don't write for a living. Beautifully crafted and oh so well written. Buyers market, sellers market......want the house: buy it.

January 29, 2012 10:25 AM
Rainmaker
648,581
Eileen Hsu
LICENSED REAL ESTATE SALESPERSON
Douglas Elliman Real Estate

If I had a dollar everytime I hear that phrase. We ask explicitly what the buyer is looking for, price and location, and then we go into the macro-neighorhood market, sometimes down to the specific city block or specific 'lines' of unit in the building to let them know that, it is not across the board BUYERS MARKET.

January 29, 2012 10:56 PM
Rainmaker
814,539
J. Philip Faranda
Broker-Owner
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

Sheila-I do write for a living! This blog is one of the true assets of the company. 

January 29, 2012 11:12 PM
Rainmaker
483,990
Jill Sackler
Long Island's South Shore Real Estate Agent
Charles Rutenberg Realty Inc. "Said and Done!"

How was this not featured? It's fantastic and it expresses exactly what agents are experiencing every single day.

February 02, 2012 04:16 PM
Anonymous
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Rainmaker
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J. Philip Faranda

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Additional Information

Phil Faranda is broker and owner of J. Philip Real Estate LLC in Briarcliff Manor, NY. Since founding the firm as a sole practitioner in late 2005, the team has grown to over 30 agents & closed 350+ transactions valued at $140 million. He is in his 4th term as Vice President of the HGMLS. This blog commentary is geared toward consumers and industry colleagues alike. You can reach him at (914) 723-8900.
Warning: *Sarcasm and irony advisory at all times.*



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