A home is a complicated purchase. The variables are numerous. The structure is what everyone thinks of first: bedrooms, bathrooms, beautiful kitchens. There are niche items, such as screened-in porches or swimming pools. There are external demands, such as level lawns and striking views. All that along with the nuts and bolts of square footage, the year the home was built, and the number of garage spaces go into the assessed values as calculated for tax purposes.
But there’s more that goes into the process of the home purchase at the time of the transaction. Market conditions, interest rates, and the time of year impact the buying and selling process. The condition of the home can certainly swing a property from very desirable to manageable, only for the most hearty investor. Sometimes the right buyer shows up and eagerly signs for the home in part because the semi loaded with their household belonging is on the way and will need to be unloaded, or parked at a considerable expense.
Real estate is a complicated product. So when a client looks over their showing sheet and wants to talk price, it is important to remind them that is set between buyers and sellers. That as participants in the market they are the best judges of the price based on the path that has led them to the home. As their agent, we can show how the numbers fall within an acceptable range of what the market has recently born out. But ultimately it is up to them to risk missing out by staying low or having buyer’s remorse by going high.
As Pete Boetkke recently wrote in What Hayek Understood About the Unknowable Nature of Markets:
But the dynamics of a market aren’t a given to be applied as one thinks wise when powerful people want to mandate lower rent or produce more computer chips. They must be generated, discovered, utilized, and conveyed—constantly adapting and adjusting to the changing circumstances of economic life. “The continuous flow of goods and services,” Hayek wrote, “is maintained by constant deliberate adjustments, by new dispositions made every day in the light of circumstances not known the day before, by B stepping in at once when A fails to deliver.”
Although these words are generalized, the ideas are there. It is a process of discovery that encourages or dissuades people as they navigate their choices amongst the homes for sale. And when they identify one that offers more of what they really desire with fewer compromises on items that bother, then they move with confidence in securing the transaction. Often, until that point in the process, they don’t know what they want themselves.
Home Economics 