“The market is going up, haven’t you noticed?”


Real Estate summer stories

July is about to expire soon and August is not expected to be a very "active" month for deals and transactions (ah… where are the good years of 2004 – 2007, when we had our best periods during summers…) More or less, we have read "the script" of this summer's market. Things have remained unchanged. Prices are not the only ones having a downwards trend. The same happens with people's mood, income and expectations for the future.

Let me share with you some of my experiences so far, during this summer… the summer of 2010.

1. More serious people, or just my impression?
Probably it is just my impression, but in case it is not, I consider this issue the most important of this summer. I don't know why, but lately I see more serious people in the market. They are working in smaller or bigger companies, being clients, owners, Real Estate brokers, lawyers, architects or having another occupation. They are not talking nonsense, but straight to the point, without having in mind how to trick you. I hope that the time when they will be majority in this society is coming fast…

2. Many people have quitted hoping
On the other hand, I also notice many people who have changed domain of activity, from Real Estate to anything else. Unfortunately I see others who have quitted hoping that things can improve, no matter which is the market segment of their profession.

3. "The market is going up, haven't you noticed?"
My company doesn't deal with sales of small apartments (except foreclosures), so I proposed to a friend of mine to search a property by himself. The lovely Real Estate agent presented to him a property in Titan and informed him about the price. When my friend told him that he finds the price very high, the gentleman had a solid reply, structured with strong arguments:

  • "These are the properties in the market".
  • "There are no better properties available".
  • "The supply is limited".
  • "The demand is growing".
  • "The market is going up, haven't you noticed?"
  • "So, let your worries aside and buy NOW, before the owner changes his mind and you lose the opportunity".

My friend, typical "person in a hurry", furious to buy NOW as "it is impossible for me to wait", asked my opinion. "What should I do, this is what they offer to me". "Simple, you should…" "… buy the cheapest one I will find?" "no, you should just refuse to give your money to bullshit". "And what if the guy is right and the market started growing?" "Next time ask him: "As the market is growing and you have so many clients, how much do you earn per month? How many transactions did you have during the last 3 months?"

He asked indeed. You can guess the answer: "One transaction, a small garsoniera, the owner was in a hurry to sell". Yeah, clear sign that the market is growing again…

4. Some agents insist trying to negotiate on behalf of their clients…
Sometimes an agent is requested to negotiate on his client's behalf. But many other times he is just asked to bring the client in direct contact with the owner, in order for the two of them to sit on the same table and discuss about the price face to face. It looks like that bad old habits are still here. During the summer I heard 6 different people complaining that the Real Estate agents were trying to negotiate with them without informing the owner, usually rejecting their price offer in advance.

My suggestion: Don't lose your time with people who don't respect your money, there are plenty of good professionals out there. Try them (and don't forget to pay them for their services, once they succeed to give you what you want).

5. An announced deal is not always a real deal
One of the biggest Real Estate deals which was announced during this summer is not a real one! Despite the announcements, the buyer probably steps back, as "his people" don't agree with the investment.

"And then why was it announced then?" you may ask. Easy:

  • Journalists squeeze any possibility for news
  • The people involved wanted some positive publicity
  • Probably there was an initial agreement and they hurried up

6. "Summer homes" sales collapsed
My company is not directly involved in "summer homes" sales. We chose not to be part of this market (as well). But I keep an eye on this domain as well, asking around (and not only). It looks like very few people "dared" to invest in a second home, anywhere at the Romanian coast. Same situation like the residential market…

More Real Estate summer stories in the end of August


1 Comment

  1. Anne Jul 29, 2010

    a few questions, regarding your advice

    “there are plenty of good professionals out there. Try them […]”

    What to do if you really like what he presents you, and you cannot find some better property? Would you recommend a way of dealing with the situation where one finds some property that one likes and which is, let’s say, an “opportunity”, and the agent that is presenting the property is trying to prevent negotiation, even if the buyer and seller agree to a smaller price, in the presence of the agent?

    Real situation: After 14 months of searching, I saw an apartment that I liked, in November 2009. I negotiated with the owner a smaller price, and then the agent started to say that prices are going up, that he wants his commission applied to the starting price. We discussed for about 2 hours, of which more than an hour, the agent explained to us about his commission, his past transactions, the history of his company etc. We just could not talk to each other, me and the owner, as the agent kept interrupting, in order to display his ego & past accomplishments, building HIS “case”… He would not let us make a deal unless we accepted his conditions.

    In the end, the owner was extremely pissed and refused the transaction altogether (stood up and left), as he did not want to pay the agent’s fee applied to the initial price. I still regret not having bought that property, where I had negotiated about 16% from the initial price, without the agent participating in any way (he just contributed with his comments about HIS fee and about how prices are rising and what a good agent he was).

    I’m wondering what to do in such a situation, when the property is really an opportunity (hard to find, and kinda frustrating to start searching again, with another agent etc.). Indeed agents only see their fee. I would pay them a fee for taking me to the apartment, and kick them out before I start negotiating, so they don’t ruin the deal. BUT of course they want a fee from the owner as well and here’s where things can get difficult.

    And two somewhat related questions:

    1. Do you agree with the double representation of agents? (they “represent”, two parties that have conflicting interests, the buyer and the seller)

    2. Do you think the services provided by agents should be different for different prices of properties/amounts involved?

    (for ex. should we be content with worse-quality services if we are buying something cheap, because the fee of the agent is smaller?). I’m not implying it should be one way or another, I’m just asking, because in my field of work, we treat every client the same, because often they come back with bigger contracts and they recommend us to others; of course in real estate it is the opposite: a person mostly buys one apartment during a lifetime. Maybe in real estate the expectations of potential customers are considered by the agents to be too high, for the fee that is being paid? As you are in this field, I’m assuming you have an idea about the expectations of real estate agents.

    What buyers are looking for are properties, not agents, so when you say “try them (the good agents)”, I do not agree: it is not a good agent that I’m after, it is a/the property. Changing the agent just means I have to start again playing the roulette of looking for a property.

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