The Market Does Not Lie
By Paul Esajian on November 20, 2013
As investors, we are often accused of being stubborn. We think that we can make a deal happen in the face of difficult circumstances or create value where everyone else has overlooked. However, every investor will loose if they choose to go against the market and current trends. In spite of what we think a value should be or what we think we can sell a home for, the market will never lie. While it is true that all it takes is one buyer to make a deal, you could wait yourself out of the business expecting something that is never going to happen. The market does not lie. Take the time to familiarize yourself with current trends.
The market will tell you what you should buy or sell for, what kinds of properties buyers are interested in and what areas you should look at. If you go against the market, you will lose more often than you will win. There are ways you can add value to your property, but in general, the market will dictate its true value.
Your local market is constantly providing information if you are willing to take the time to understand it. Look at what properties in your area are selling for and how long they are taking to sell. This could be the first indicator of what is going on. If you see that multifamily properties are selling quickly, you can decipher that they are in demand. If single family homes are taking 90-120 days to sell, look at where they were originally listed and what the final selling prices were. Where they end up could tell you the direction of your local market.
If you try to defy this data, you will often be left wondering what happened. We cannot let our stubbornness effect what the market data is telling us. You may think you have a better product and buyers will notice that, but they may not be willing to pay more than the market is indicating. Much of home sales come down to pricing and timing. The same house can see a 30% swing simply based on the timing of the sale. Keep your eyes and ears open to what is going on with the area around you. That should be the most telling sign for what your prospects are.
If the market is telling you to list for one amount and you decide to try for more, you may be doing more harm than good to your property. If you overprice the market, your home will sit for days without any action and eventually buyers and realtors will look elsewhere. When you finally decide to listen to the market and lower the price, the damage may already be done. Buyers typically don’t come back to look at overpriced properties, and if they do, they will sense vulnerability and will offer well below asking price.
The data is out there for everyone to see. All you have to do is listen to it. Sometimes it is difficult not to let your pride get in the way, but as much as you may know, the market never lies.