I find it fascinating as we at Buddy Frey & Associates and at Keller Williams Realty here in Charlotte, NC, show that real estate in many areas is still overpriced. I think we would all agree that Charlotte area property prices have declined, yet so many homeowners (and their agents) are still living in a bubble. Their homes and condos are priced too high.

Why? Why is it so darn difficult for a seller to come to terms with the reality of what their home is worth? Why do we all view a home differently than any other investment?

What do I mean by that?

If you bought Yahoo stock at its high of $108 per share and had to sell today, you would understand that you could sell your stock for something like $10 per share. You might be disappointed to take the loss but if you HAD to sell you certainly wouldn’t price it at $20 per share — especially if you thought prices would continue to go down. You would feel lucky to sell it at $10 per share. In other words, I doubt you would tell your stock broker “I don’t care that it is only worth $10 per share today, I have over $100 invested in that stock and I need that money to pay off my credit card.” Your stock broker without hesitation (except for a quick laugh) would let you know that the market does not care how much you paid for the stock; the market does not care that you need the money you have invested to pay off your credit card. A buyer will pay the market value of that stock. They will pay the $10 per share.

And so it is with the housing market. A home is an investment. And the fundamentals of investing and economics apply. In a declining market, a buyer is always looking for the best value – they are looking for the “deal”. We accept this principal with other investments, so why is it so difficult to accept with regards to the value of our homes?

Yep. The cold reality is that buyers don’t care. They don’t care what we paid. They don’t care what we invested in our special curtains and upgraded ceiling fans. They don’t care about the time we invested in our flower garden. They don’t care we need that additional ten grand to buy our new house. They are indifferent that we are taking a loss. In any market, a buyer only cares about their situation which requires finding the best house at the lowest price. In a declining market like today, the ‘lowest’ price is the home with a ‘deal’ price attached. Bottom line: Buyers do not buy overpriced homes in a declining market.

I urge you as Charlotte area property sellers to consider your home or condo like a piece of stock on the Nasdaq. Check in with your self and make sure your identity is not wrapped up in your home. And then ask yourself, “What would a buyer pay for this investment in this market?”

Those of you who really want to sell need to ned to take a hard look at the market and make some decisions.  Spring is right around the corner and it might just be the best time this year.

Thank you to Kristinna Wise in Austin, TX for this content  :-)

Buddy