Every type of real estate market brings indecision to so many buyers and sellers; for obvious reasons. In a typical real estate transaction, the motivations of the parties are often opposite. Buyers want the best house, at the lowest cost, with the lowest interest rate possible, along with concessions from the seller.

 

On the other hand, sellers want to hold out for the highest price with the lowest cost, for the most qualified buyers. This is all true in any market, although often the goals shift as the markets ebb and flow.

 

Taking a snapshot of the market today (October 2024), we are in a steady market, with prices climbing at a slow level, while interest rates have ticked downward. Then the Fed dropped the overnight lending rate, and interest rates responded trending a bit more downward. Inventory is mostly steady, as the market seems to absorb the listings at a good pace. Clearly in some markets, inventory is shrinking.

 

In our lives, we are often charged with waiting too long for something, before it, whatever it is, passes us by. Case in point; in the 1970’s, personal video tape products were introduced. The original version for home use was Betamax, introduced in 1975 by SONY. While distribution was widespread at first, many Americans waited for something. Maybe for it to improve, a different system, a smaller unit, a lower price. While sitting on the fence, the units became smaller, the quality improved, and the price came down. The following year JVC (The Japanese Victor Company) introduced VHS, which was better quality, had longer recording/playing times and were introduced at a lower price.

 

This is true of so many consumer products at their introduction. At first, people are hesitant to jump in, waiting for something.

 

Think of fax machines, the computer chip, mobile phones (which at first were only installed in cars, then Motorola introduced the first handheld, the Motorola DynaTAC 8000X also known as “The Brick”. In 1983, it became the first commercially available handheld mobile phone. At the time, with so many mobile phones installed in cars, most people were reluctant to abandon the car phone to go to a handheld, that at first had a poor reputation and an equally higher price. Car phones first cost around $4000 plus service to install, often paid out over 3 years. The price-tag on the Brick, also at around $4000 plus service, kept people on the fence about shifting to the Brick and others that followed.

 

Sitting on the fence is described as a process people go through, while waiting to decide to jump into a market. Cell phones, fax machines, video recorders, electric cars, and buying a home.

 

There are so many factors leading to a decision to buy a home. If you are focused solely on interest rates and are seeking to convince potential buyers to jump down from the fence and buy as rates drop, you might not be considering all the other factors they are weighing.

 

Along with the interest rates, loan programs are equally important. What are the terms, cost for fees and points, and the type of programs available.

 

Also, where are they living now. Are they renting an apartment? Living with mom and dad? Do they have their starter home to sell first?

 

What are they reading and hearing about sellers? Are prices staying level, or are they climbing? Concessions? Could they ask for assistance from sellers?

 

What are the important issues for them. Near schools, away from noise, needing freeway access or ground transportation?

 

Would they consider a fix-up? How much fixing could they tolerate? Could that impact the loan they might seek? (such an FHA 203.K Home Remodel Loan)

 

And now, what are they sensing about the need to pay a real estate agent that helps them find a house?

 

If you sense hesitation from buyers, offer them the time to sit down and review their goals, needs and “must haves”. Be sensitive as to why they are sitting on the fence, and what might be the trigger for them to climb down and start looking at homes.

 

If a buyer simply wants to see the rates drop, at what point will they jump in? Maybe they have a number in mind, or maybe they want to wait for the bottom, which would show itself once the rates tick up a bit.