Home Buyers are Cherry Picking

Buyers are cherry picking the best houses in this market, and that means the best houses in the best neighborhoods are selling now. I know this, because I just sold two.

There is a lot of talk and much in the press about the large inventories out there. There are more houses on the market and fewer selling than last year, and foreclosures are only adding to that inventory. As a result there is a perception by the public at large that buyers have all these choices, like a smorgasbord, and that buyers can just sit back and take their time, because they have all the time in the world.

Buyers don’t have all the time in the world to find their home, and here is the revelation. Right now buyers are cherry picking. Of course, they are cherry picking. Why not? This is a time to find a good deal. But when I say buyers are cherry picking, I mean something much more, something with far greater implications for buyers.

The process for a buyer is fairly standard. First, buyers spend a lot of time on the Internet filtering through large numbers of homes in the MLS online. They narrow down the possibilities after days, or more often over a period of weeks, and then they start driving around or they contact a Realtor.

Then a buyer may look at a dozen houses with their Realtor, or maybe even two dozen. Out of 10 to 15 houses, the houses they have pulled out of the MLS after filtering with their parameters, they may find one that would make them say, “Yes, we could live in this home. This could be home.”

Buyers are not all that different. In other words, 100 buyers tend to gravitate toward the same same houses, the same one out of 10, because that is the nicer home in a nicer neighborhood, and the current listing price is really good.

Buyers are cherry picking the best houses in the best neighborhoods at the best prices. This makes 90% of the existing inventory irrelevant or not part of most Buyers’ universe of potential homes. Since the cherry picked homes are not part of the 90% of remaining homes for sale in the MLS, the available inventory that is suitable for a particular buyer is really quite small, perhaps only 10% of the actual inventory.

In Clallam County, we have about 800 single family residences in the MLS for sale. If I am right about this cherry picking process that is going on right now, that would mean there are probably only 80 homes that might actually be suitable for you. But then we both know that you would narrow that list of 80 homes down very quickly, because that includes all homes at all prices in all neighborhoods. So by the time we filter that list of 80 homes based on your parameters, that will leave something like 20 homes on the market that might be suitable for you.

How long do you think those 20 homes will last when all other buyers like you are doing the same thing you are doing–cherry picking the best homes in the best neighborhoods at the best prices?

I would never suggest a person should get in a rush and buy a home out of a false sense of urgency. One should always take one’s time and try to make wise decisions, and that includes buying your next home. But if you think you have all the time in the world, may I suggest that in three to six months, more or less, the ideal home you would have bought will have already been cherry picked, and the best homes will not be for sale for a long long time. You may be left with the remaining 90% of the inventory, and settling for something less than your ideal retirement home is not a very attractive idea to most people.

Here’s a question for you to consider. Do you want a home that is someone else’s idea of a a dream home with their perfect floor plan and kitchen design? Or is your dream home going to be perfectly suited for you and your preferences? You can see why many people are still choosing to build their retirement home, rather than buy an existing home that was someone else’s dream. Building your own home right now may cost somewhat more than buying an existing home that is under valued, but if you expect to live the next 10 to 30 years in your retirement home, what price do you put on comfort and convenience for the rest of your life?

By the way, interest rates have bottomed out in my opinion, and they are getting ready to start a steady climb upward, and with the billions of dollars being pumped into our economy by the Feds, you can expect at some point soon, we will begin to see recovery, which means a slow but steady inflation in prices. If you’re expecting prices or interest rates to go lower, think again.

If I were going to buy or build a home, and I was prepared to start, I would not delay. That would not be wise, in my humble opinion.

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