Selling in a Down Market

Well, to hear all the "chicken littles" tell it, the real estate market is so bad that sellers cannot sell their homes.

Frankly, that is a lot of hooey!

It would be so refreshing to hear even one of these "couch experts" tell the true story. They won't ( or can't), but I will.

The population keeps expanding. All these new people need to live somewhere. And for this reason, there will always be buyers. Always. But during a market shift such as this, there are fewer stupid buyers. Buyers become more picky. They want more, but they want to pay less. They are not going to pay inflated prices like those who came before them in the boom times.

The buyers are there, but they will not overpay. The problem is not a lack of buyers. The problem is a lack of sellers who can, and will, sell at a reasonable price. In many cases, they cannot - if they overpaid during the boom, then they cannot sell at a reasonable price without losing money.

Since the problem is not a lack of buyers, then a seller can sell his home provided he can make it attractive to the buyer. In some cases, it's as simple as bringing the price within reason. Where this may not be possible, the seller might consider helping a buyer to better afford his home, by offering better terms, deferred down payment, low-interest seller carry-back etc.

Unfortunately, many sellers are caught in the middle - their properties are not worth as much as they owe on them. For them, the best option may be to wait it out, if they can. Markets change. And if they cannot wait it out, perhaps they can offer an exchange with another seller (in the area where he wants to live) who is in the same predicament. In that way, they can relocate without having to sell at a price that would put them in financial jeopardy.

Now, if I were a younger man, I would start a company that acts as an "exchange clearing house". Seller's could list with me, stating the location they want to move to. My job would be to match the sellers (wherever possible), and pocket a fat fee for my trouble. If John Doe in New York has a home for sale and wants to move to Los Angeles, and Joe Johns in Los Angeles wants to unload his home to move to New York, a simple exchange could benefit both. And as a 1031 exchange, both parties would avoid income taxes on the trade.

Something for some agressive, young lion to consider....

NOTE: One reader seems to have misunderstood, and stated there are companies that handle 1031's. While that is true, they do not generally "match" seller's with other sellers nationwide in a DIRECT trade, as I have suggested here. Most 1031's are indirect, and do nothing to solve the immediate problem of today's sellers - not being able to sell.