There aren't any buyers out there!

This common expression can be heard day after day in many local real estate offices including ours. "I need some buyers to work with" "Do you have any buyers?" "Where are all the buyers?" In "good markets", there is the perception that there are lots of buyers out there and conversely, in "bad markets", the perception is that there are no or few buyers in the market.

My real estate company, Coldwell Banker Residential Brokerage, owned by NRT, Inc, has been pro-active enough to offer training to all its agents on the most effective approach in a depreciating market. This seminar was presented by Jay Schweppe who owned his own company in Montclair, NJ and sold to NRT. He made lots of money selling in down markets as well as up markets using the approach that he presents in his seminars. Many agents will say that this particular approach would not work in their area, but the fact is that this method works in every market in every location without fail.

The reality is that the "Buyer Pool" remains relatively constant in all markets. The variable is whether or not the buyers are perceiving value. When there is a perception of value, buyers act. Without this perception, buyers will wait. They are still buyers but not prepared to act until someone creates that perception. Of course, interest rates can alter the size of the buyer pool somewhat, and job losses can shift the buyer pool from one area of the country to another. Often times, buyer pools will shift to areas of the country where real estate is deemed a value causing that particular local market to appreciate. In actuality, almost anyone could be a potential buyer at any time.

If I stood on a very busy street corner with my newer MacBook and shouted out or held a sign up asking anyone to give me $1,000 for my laptop, chances are, I would not have any interested parties because most would know full well that they could buy a brand new one for just slightly over my asking price. There would be no perception of value amongst those buyers. However, if I stood on the same corner with the same MacBook and asked if there were someone willing to give me $100 for my fully functional laptop, chances are that several if not many people would step up to buy. When there is more than one interested buyer, that interest and perception of value, will cause those buyers to increase their offer up to a certain point (what they feel it is truly worth).

The same is true for real estate. Buyers determine what a property is worth and the seller either sells or doesn't sell to them. One's property is only worth what a qualified buyer will pay for it on the open market. I have been tracking the local real estate market very closely for the past 12 months in order to ensure that I am current on what is happening in the market. Compiling data from the MLS on new listings and pending listings by month and then entering that data into graph form, one can see very clearly what is happening in our area. Data derived from the NNEREN MLS:


The light blue bars indicate new listings. Except for the holiday months of Nov and Dec, one can see that the trend has been growing inventory month by month. Inventory is what drives the prices upward or downward. It's all about supply and demand. The darker blue bars are pending sales. Those numbers have remained pretty constant over the past year. What doe this mean? The buyers are out there and they are buying property. The problem is that there is so much inventory to choose from. When there are more properties coming on the market than are going off, prices have to go down.

Historically, times of "crisis" in real estate have turned out to be fabulous times of opportunity for buyers. There are some incredible deals to be had out there right now and I am hoping to get in on a few of them myself. I guess you might say that this buyer has perceived the value. Don't miss out because you might be kicking yourself 5 years from now, saying "Jeez, I should have bought in 07 when the prices were hitting rock bottom."