Perception. It’s a powerful word for sure, as our perception of our surroundings, of our relationships, and of our businesses shapes just about every decision we make. One thing is certain though, perception is not always reality. The perception that exists in this current Lake Geneva real estate market is that we are in the midst of a buyers market. A buyers market simply means that there are more sellers than buyers, and that buyers technically should have the upper hand. With existing homesales down 22% in Chicago this quarter, perhaps a buyers market truly exists there. The perception of this real estate agent? Sellers are dictating in this market.
I’ve posed this question to many clients this week. “What is the most important thing you need in order to truly be in a buyers market?” Many answers included inventory and buyers. True, but not the most important thing. What you really need to create a buyers market are motivated sellers! Sellers that want out, sellers that can’t take it any more, sellers that have ballooning ARM mortgages that some subprime broker hooked them on. You need motivation. A seller without a need to sell doesn’t do an ounce of good for a buyer who wants to buy.
Buyers are coming to Lake Geneva this spring in huge numbers. I’m busier this spring than I have been in any previous spring. There is ample inventory in my market, but not a glut of it. By my market I mean vacation homes priced typically from $400,000 to $3,000,000. I have fielded two offers this week on properties that I am representing that have sickened me. Made by buyers who mistakenly think that a slowdown in Chicago real estate means a slow down here. The difference in the markets is clear. Buyers buy here because they can, buyers buy in the city because they have to. A secondary market is very different from a primary one. When you consider the downturn in national resort real estate, primarily in areas like Florida and Las Vegas, there’s one constant: Speculative buyers. These buyers ran the prices up in select markets, only now to panic and slash prices as the market slows. Buyers in Geneva are typically a family or retirees who have long wished for property on or near Geneva, and now have the financial wherewithall to carry out that dream.
It’s a discretionary buy up here, but what buyers forget is that it’s also a discretionary sell. Many sellers are moving laterally in the market, or trading up or down. Some leave the market altogether, but that is the exception, not the rule. So a note of caution to all buyers this season: Try to feel out the market with lower offers in hopes of finding a seller who has some motivation, but realize that more times than not, he doesn’t really need to sell. He’d like to sell, but he doesn’t need to. Stubborn sellers are good for a market, because they firm up pricing when markets soften. Buyers now aren’t going to like that, but once they buy here and one day decide to sell again, they’ll more than likely become the very stubborn seller that they now loathe.