County Fair.....Diary Day Two

I had the early shift Saturday arriving at the fair grounds a little before 9 a.m. There is something special about directions that include "turn right at the goat barn, go to the end and then turn into the vendor lot next to the livestock exhibitor parking".

The gates opened and the first visitors began their search for giveaways and as much free stuff as their plastic bag would hold. I was ready. I had a full helium tank and a 4 boxes of balloons prepped with ribbon and a nifty little filling cap. Soon the midway was adorned with small children holding on to red, yellow and blue Long and Foster balloons.

There was an occassional break in the action which afforded me the chance to slip next door to the Cheese booth and purchase a delightful grilled cheese sandwich. Later in the morning, I headed north to avail myself of a couple free samples of italian ice.

About mid-morning, I actually had the chance to chat about real estate. Two women came up and explained that their mom had recently passed and wanted to know if I could explain how they could sell the house when they both didn't live in the area. I went over the process as best I could, got the information and made an appointment to visit the home after the fair and list the property.

Then came the pleasant surprise. The real estate editor of our local paper dropped by to chat me up about the market and what folks were saying when they visited the booth. We talked for a while and she made sure to fill out a form to enter her name in the drawing for one of my paintings.

As my shift came to a close, the sweetest little bundle of joy on the fairgrounds rolled up in the stroller her mom was pushing. She squealed with delight when I tied the bright red (just like Elmo) balloon to her little wrist. It was her first visit to the fair. Rather than pack and go, I offered to walk the grounds with her and her mom.

I made sure to point out McDonalds farm and enjoyed the wonder in her eyes as she stroked a bunny rabbit. Our last stop was at the ice cream booth manned by the Lions Club. We ordered and sat back in the corner so this little princess could watch people come and go. She actually has acquired the talent to bite an ice cream cone and soon her smile had a sticky chocolate ring around it.

I walked them to the exit and gave her mom a hug and thanked her for letting me pass on the tradition. Can life get any sweeter than having your daughter bring your first grandchild to the fair so that you can share a family tradition? I think not.

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My beautiful granddaughter Rylee

Science has explained "buyers market"

I have been just as busy as most Realtors the past few months. New buyers are beginning to show up and appear ready to put there proverbial toe into the water. Rates have held at around 6% and that is about as good as they have been for the last year or so.

These new to the market folks are stunned to see the wide array of homes available to them. It is the housing version of sensory overload. Apparently, the total volumn of homes has reached a point that clients are once again asking for advice regarding the "best home for the money" on the market. This allows me to actually do my job.

Of course, I shouldn't have to mention that as I sift through the multiple listing service, for sale by owner.com, and craigs list for properties that will meet my clients needs and stay within the range of their comfort level regarding price, I am still puzzled by how many homes are still priced above current market levels.

I understand that the market did an incredible 180 degree turn around over the last 9 months. If Katrina were a pregnant woman, we have delivered a brand new, shock to the system, it can't be possible price adjustment to the housing market. Sellers that have not adjusted to the market are not really sellers - they are extra logs in the river of buying and selling houses. They are trying to be part of the market but they are the bottleneck to a smooth market.

And apparently, it is beyond their understanding.

Scientists have done research in the field of neuroeconomics. Neuroeconomics is the study of the psychology of finance. A recent article in the Washington Post shared the following.

Psychology of Money Drives Housing Market
Studies of the psychology of finance indicate that emotions play a huge role in decisions people make about money.

"There's a whole emotional processing system that goes on in the brain that's largely beyond our control," says Kevin McCabe, a professor of economics, law, and neuroscience at George Mason University in Fairfax, Va. "The general view is that our emotions control us, and not vice versa."

The study of neuroeconomics has illuminated a few key concepts: Many people will pass up sure profits for illusory ones. Some will turn down profits if they believe someone else is unfairly profiting more. Some will even refuse to sell if they believe they may come to regret it, because fear of future regret can be as powerful a motivator as money in the pocket today.

While little of this has been applied scientifically to real estate, it is easy to make the leap.

For instance, much research has been done on the concept of "loss aversion," which shows that people tend to deny reality when something they own, such as a house, declines in value. Sellers maintain the asking price even at a level that makes no sense, economists say. Similarly, home sellers become attached to the prices their neighbors received at the top of the market rather than current prices, and they become reluctant to sell unless they get that higher price.

"There seems to be a psychological resistance to taking losses on the sale of a house," says David Laibson, who teaches psychology and economics at Harvard University. "People think they'll make money on it....That logic worked for a long time, and now anyone who bet on that logic is being burned."

Source: The Washington Post, Kirstin Downey (11/04/2006)

My thanks to the many participants that allowed science to identify things that we Realtors have always known. I have to say that I read the report, jumped up and yelled outloud "AFFIRMATION BABY." My wife came in the room to see what the ruckus was about. I showed her the article. I told her that there was a reason that the house in King Farm wouldn't sell for a million. I stammered see, this is why the kids took the buyout and the relo company is stuck trying to sell their townhome in Germantown. It wasn't my fault.

She just gave me that "look" and reminded me it was trash day tomorrow and I had better move the garbage cans out front before it gets too late.

The last I saw of the Post article, it was on the top of my newspapers in the recycle bin. Sometimes you can know reasons for actions, sometimes you can even have scientific reasons for actions............but.......my understanding can only be shared with those wanting to sell.

They have to choose - become another log in the jam or take the smooth route to selling your home and doing what the smart folks are doing. What's that you ask?
Why it's the subject of the next post - buy up in a down market!