It’s been said that patience is a virtue. If you’re trying to teach math to a child, or trying to train a dog to balance a cookie on its nose, then the adage is probably correct. But if you’re looking for real estate in a tight market, is patience indeed a virtue? The answer is, as with most things real estate, which is also the reason that iBuyer models are failing and will ultimately all fail, is, it depends. Targeted patience with some expected pattern of reward is a terrific idea, but that means that not all patience in real estate is good, or smart, or anything but an exercise in futility at best, and stupidity at worst.
Let’s pretend we’re in the market for a house in Someawfulplace, USA. The house we’re looking for needs to have four bedrooms and three baths, a three car garage and it has to be in the school district where our son goes to school. This is a nicely defined search, but we’re going to narrow it a bit further by focusing on two subdivisions in particular, both close to the school and both full of reasonably nice houses. These neighborhoods both back up to a highway, and because we’re not stupid, we’re not going to buy a home near that highway, so we’re looking for homes in the front third of the subdivision, so as to protect our ear drums and our investment from the noise of nighttime engine-braking. In our search range we’ve learned there are 200 total homes, but only 80 of which have the required attributes. This is our market and this is our aim.
After learning which agent sells the most real estate in our target area, we enlist the agent to keep us informed of new inventory. We learn that there have been four sales in the past year that matched our requirement, and so we can have a reasonable expectation of inventory presenting itself within a few months. A few months pass, with no inventory. Another month passes. No inventory. The holidays come and the holidays go, no inventory. Then on the fourth day of the sixth month, a four bedroom house comes to market on our favorite street and we buy it. Timmy doesn’t have to switch schools and we’re happy. Our patience was rewarded.
Now consider searching for a specific lakefront home at Lake Geneva can be nothing like this sweet, make-believe story I just wrote. A lakefront search here can be a miserable endeavor, filled with an overabundance of nothingness, intermingled with a few bad pieces of inventory here and there. Imagine playing hide and seek in an empty square room. At first, you wonder if there’s a part of the room you haven’t yet explored. Then you realize it’s just an empty cube, and your search quickly turns into a hunt for your own sanity. Lake Geneva searches are like that, which is why the concept of patience is one that should be applied with some serious parameters.
If you’re looking for an entry level lakefront under $3M, you should be patient. You have no other choice. If you’re looking for a lakefront home priced up to $10M, you should also be somewhat patient, because what you’re looking for will certainly be available at some point, assuming you’re open to a project, or a tear down, or anything at all. At Lake Geneva, I rarely sell perfect properties. I rarely sell a lakefront home to someone who finds their target and describes it as “perfect”. That’s because this is a small market, with limited inventory at all times. It’s a market where I advise buyers to be component buyers. A buyer might be seeking level frontage with a newer build, a pool, a tennis court, seven bedrooms, and they want to be on the north shore only. That’s a fine vision, but they’re never, ever going to find it on the market. That’s why this sort of buyer has to weight what they value the most and proceed with tactical patience. If location is the most important thing (real estate pretends that’s the case, but buyers don’t actually buy based on location as much as they buy based on shiny), then focus on that first. If the size of the home is the next most important item, then focus on that, too. But at Lake Geneva I don’t deliver perfect properties where you’ll get to check all eight of your boxes. I deliver imperfect versions of your vision, and if I do a terrific job, we just might get to check four of your eight boxes.
And that brings us to the patient buyer. The buyer waiting for eight out of eight. The buyer who believes that patience is a virtue. That buyer will be forever left out of our market, because elite markets with finite boundaries rarely deliver everything someone wants. Component buyers who properly prioritize their needs are the only buyers that find success in this market. Of course this also means that incredible mistakes are made by buyers who lack even a shred of patience, but that’s a different post. Waiting for perfection at Lake Geneva is silliness bordering on insanity, not virtuous patience.