If you gave me a couple hours of your time, assuming you would have to indeed give me that time as I could likely not afford to pay for it, I could show you value in every price segment of our Lake Geneva real estate market. There would be value to find in the entry level lake access market- not a ton of it- but there would be value to be discovered if you allowed me the Sherpa responsibilities for that hour or two. There would be value found in the upper end of the lake access market, and there would be plenty of value available in each of the lakefront segments as well. I would drive you to these values, tell you about them, and then we’d drive to the next one and then I’d talk some more. You’d probably wish I spoke less.
But the value that we would find wouldn’t necessarily be represented in the asking prices of those offerings. The value would be found on a $700k home if I thought circumstances and market conditions might lead to that home selling for $600k, perhaps less. The value would be in identifying a lakefront home for $1.6MM that I think might trade for $1.3MM, perhaps less. This is why your agent matters, and it matters so much more than you think. Oh, so your agent is your best friend’s ex-nanny? Congratulations, she just might be costing you not only a clear representation of accurate value but also actual money. And if we’re talking about Geneva lakefront property, that pseudo connection just might cost you hundreds of thousands of dollars.
So the value that we find, the value that we scour the market in a timeless search for, is temporary. It is fleeting. Market conditions are changing, this is true. And while they are not changing to represent actual increases in property value to any measurable degree just yet, they are shifting from favoring the buyer to ever so slightly favoring the seller. This doesn’t mean a shift in value, but it does mean a shift in negotiating power, and it can ultimately mean a shift of a hundred grand or so off of a property that you’ve been eying for months, or years, or if it’s Door County, maybe a decade.
The key to all this value, to these thrown about numbers that would represent a true deal, is the absence of other interest. If you identify a property, hopefully through me, and we peg its value at 15% less than the current ask, this is wonderful. And if the property is sitting idle and there are no other interested parties, our clean, smart, cash offer just might overwhelm the seller with its efficiency and they may take the deal and run. We would succeed then, which is the goal here. But if we prepare our offer on a Friday and on Saturday the seller receives another offer, the likelihood of our offer ending up at our desired terms is not strong.
The presence of other interest, and of other offers, is what obviously shifts negotiations from a buyer to a seller. When I’m representing the seller, I’m dreaming about a multiple offer scenario, and loving the thought of pitting one buyer against the other. But if I’m representing a buyer, and the property is targeted, this is where urgency does play a factor. Taking all the time in the world to identify a dream property is a very prudent move, but waiting until the wind blows just right to make your offer can be a mistake. Back in 2009 and 2010, a delay on the buy side generally just let the seller grow more anxious and depressed. Delaying in 2012 simply provides another buyer an opportunity to move in and make a bid- even a low bid- and that alone can ruin the most shrewd of negotiations.
That is a side note in this lesson for today, the actual negotiations. It goes along with that ex-nanny’s best friend’s neighbor connection that historically bridges buyers with their agents, and it spits right in the face of those connections based on familiarity instead of merit. Negotiations are the key to success, assuming that the first key is identifying a property worthy of intense negotiations. Plainly put, can your agent beat another agent in a negotiation? Real estate is about smiling faces, gold jackets, refrigerator magnets and car door graphics, but it’s supposed to be about the pursuit of value and the execution of the purchase. Negotiations aren’t mean to be particularly friendly. They are meant to be won. If you’re a buyer considering a vacation home purchase here, the question is both simple and hopefully rhetorical: Do you want to win?
If the answer was a presumed yes, then there are things that we must do. We must work together, me as the Sherpa, you as the Sherpee, and this market as our soaring mountain. If a target property is in your sights, the time is no longer right to wait. Waiting just allows another buyer to make the play before you, and once that other offer is made, your negotiating strength has been compromised. Let’s find value, and when we find it, let’s grab onto it and make it ours at not just any price, but the right price.