Balancing price pressure and livable value.

May 19, 2008 - It’s no secret that swollen local housing inventories and national media hysteria have created dramatic price competition among sellers. This has transformed formerly rational home buyers into frothy-mouthed, rabid bargain hunters. What’s needed is a little perspective in balancing the quest for a perfect-timing, bottom-of-the-market fire sale and the simple goal of finding the right home for your lifestyle at a fair price.

My phone rings constantly with people who want to buy the day the market hits bottom. Not a day sooner or a day later.

A lot of people try and employ this strategy with the stock market, or wait for a set of patio furniture to go on clearance in October. But in our desire to avoid paying a penny more than the lowest historical price for something – we gamble away our opportunity to enjoy livable value.

I define livable value as “What it’s worth to me. Personally.”

The real estate industry has done itself a disservice by allowing an opportunistic audience to turn the housing market into a commodity. Livable value is being ignored.

I’m no longer hearing as much about school districts or neighborhoods. I’m hearing, “How long has it been sitting?” or “I’d offer them [insert completely inadequate number here] and see what they say.”

The price of a home is extremely important, but it’s not singularly important.

The perspective that’s missing is the concept of livable value. What’s it worth to you? Is it really worth living in your #3 or #4 choice because it’s priced $30,000 less than your #1? Maybe. Is it fair to expect the seller of your #1 choice to accept an irrational price reduction simply because of distressed competition? Absolutely not.

For families, a home is more than a financial investment. It’s about establishing a connection with your community and a hub for your loved ones to interact with society.

The most important question about price should be, “What’s the livable value to me?” I’m not suggesting that price pressure is unimportant – but I am declaring that it’s become too important.

It’s a great time to be a buyer – not only is there enormous selection, but prices are competitive. There’s no need to grind sellers with ridiculous lowball offers or look to take advantage of a distressed family who needs to move. Negotiate. Put yourself in a good position. But stop grinding.

If you’re shopping for a home in this market, look at more than price competition. Look at livable value. You’ll be much happier in a home that fits your lifestyle than the one you got on “clearance” for 5% less.