The Freaks Come Out at Night

J Philip Faranda July 12, 2011

BoozeI’m not interested in discussing whether or not it will ever be Morning in America anytime soon, but I think we can all agree that it isn’t Morning in Real Estate right now. We are in a dark evening in some precincts, and from my observations the freaks really do come out at night. The red meat of the buyer pool is incredibly marginalized now, often paralyzed by a lack of confidence or financial setbacks, forcing many agents to work with what some might term “the bottom of the barrel.” 

In short, many of the buyers out there now were never people who would have been in the front of the line during the days of irrational exuberance. And sellers, who are in mourning over lost equity and often under their own financial stress, are often at their own breaking points. It makes for some, shall we say, interesting scenarios. 

  • Take the case of the buyer who gets a perfectly good deal-a great one, as a matter of fact- yet they still have an adversarial attitude toward the sellers, as if they are owed something more. After weeks of increased demands on the seller, the deal implodes when the homeowner declines to put on a clown outfit and sing with a banjo. Apparently, a huge concession, some furniture, the tractor, snow blower and repairs aren’t enough, the seller has to live in a hotel for 3 weeks because the buyer’s rate lock expires too soon. Their agent, hanging onto their ankles for dear life (and a commission), never thought to help with mortgage financing for fear of being sacked. 
  • The you have the cash buyer who runs all over town making offers of 65 cents on the dollar, whose agent proudly boasts “but it’s cash,” as if the term will perform a hypnotic jedi mind trick and convince the seller (and their lender perhaps) that the form of payment will trump basic addition and subtraction. Again, the agent is just happy to be working with someone, operating under an illusion that they’ll make a sale with this person because Cash is King.
  • Sellers aren’t immune, we see  our share who are turning down offers an eyelash short of asking price because if the offer is that good, they must have been underpriced. And their Aunt Doris, who lives a time zone away and sold real estate in the 1980s, wonders aloud how they can take that deal if there hasn’t been an open house yet. 
  • And then you have the lawyer, my personal favorite here in New York, who apparently lives in the illusion that it is still 2005, choosing an inane battle to fight to the detriment of losing a buyer with a full commitment. So what if the deck is illegal? Because, dear, banks don’t loan money on homes that are out of compliance. Now do us a favor and go back to writing wills for your bridge partners. 
Many of these characters would have been thrown back in a New York minute if we had other options (and sometimes, we do) but when the mainstream is compromised, agents work the margins. Moreover, there are many interesting psychological profiles who sat on the sidelines during the boom who waited for the slowdown to come out and play. I don’t blame them. Even someone that I would characterize as more reasonable is under more stress than in years past, and stress is destructive.
I think that agents who succeed in today’s market are truly the survivors. No deal in this climate is low hanging fruit. Patience, judgment, self control and effective, difficult communication are skills developed during adversity. We’ve got plenty of that. 

 

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