Mythbusters

It’s a buyer’s market, sellers are desperate, I can get a really good deal.

Not exactly. It’s not a buyer’s market, most sellers are not really desperate and “a good deal” is subjective. Let me explain.  According to Investorwords.com

buyer’s market

A market which has more sellers than buyers. Low prices result from this excess of supply over demand, also called soft market.  Opposite of seller’s market.

When properties are receiving 10-40 offers each, it’s not a buyer’s market.  It’s a seller’s market.  And they aren’t desperate.

Yes, but if someone wants to sell in this market they must be desperate. Not exactly. There are numerous reasons to sell in this market.  Job change.  Life changes.  No one is holding off having another child because of the economy.  I defy you to show me a woman who will bet her biological clock against a shrinking economy.  If a family is ready to grow, they’re going to grow, the economy doesn’t matter. If they need more space, they need more space.  I would argue that this is a great time to move up or downsize.  No matter which way they go, they save money on their property taxes, the purchase costs are less and that helps offset the pull back on the sale of the existing home.  Not necessarily a recipe for desperation.

Now there are desperate sellers out there, but don’t assume that every seller is desperate.  Some just need to make a move for a real pedestrian reason, like life.

Yes, but I want a good deal.  Who doesn’t?   I have yet to receive a phone call where the potential buyer said “Please find me an over priced home in a lousy neighborhood with questionable schools and a lot of gang activity.   It would be best if there were a liquor store on the corner with a bunch of guys hanging out so I could buy my crack from them”.

Does this property make sense right now?  Will it make sense in five years? Do I want to spend the rest of my life in this home?  What is your holding period?  A thousand or even ten thousand dollars right now may make absolutely no difference five years from now.   No difference ten or twenty years from now.  Is this a flip or is this a termed investment with an eye towards generating income and appreciation?   What’s the exit plan?   Is this to be your dream house?   Is the exit plan giving the home to one of your children to raise their family?   The numbers differ depending on the scenario.   A good deal really is subjective.   Before you ask the question, know what your definition is.   It might simply be a property with enough space for the family in the preferred school district with a payment that the family can afford.   Or it could be an investment and only the numbers matter.   Know the definition of “a good deal” and know the exit plan to achieve the greatest return on investment.   Maybe the return is a great eduction for your kids in a house on a safe street.   That’s measurable.   Don’t discount it.   It has value.   And it colors the definition of what a good deal really is.