Vol. 237 - Swing for the Fences!
I have literally watched hundreds of baseball games over the years, having produced two boys who both took to the game as soon as they could swing a bat at a T (clearly they took after their father, neither of them wanted to be dancers - go figure). Our elder son, Case, no longer plays having moved onto college, but our younger son, Tristan, spent the spring on his high school team and is now currently involved in a very active summer league as well. Baseball - and the love of baseball - are part of our family's traditions, as much as Thanksgiving and Passover. Baseball is in our blood, and in our bones.
Admittedly, I don't know all the nuances of the game the way my husband and boys do. A devoted Yankees fan since childhood, Cliff seems to remember the stats on every player who's ever graced the field and can recall specific games and innings with accurate detail (he's Rain Man). He knows who holds what records (Highest life time batting average, Ty Cobb's - .367) in what years they were made (1941: the last season anyone batted over .400 was Ted Williams with .406) and when they were broken (1961: Roger Maris broke Babe Ruth's 1927 single season home run record of 60 with 61 home runs in a 162-game season. Ruth set his record in 154 games. ("And this is important Juls, Maris received the only asterisk in the record books for this distinction.") He follows "on base percentages," "earned runs" and "batting averages" the way many astute Buyers and Sellers follow our local Real Estate marketplace.
Me? I'm not so interested in statistics. Content to sit in the bleachers with the other parents and dutifully cheer as our sons make contact with the pitch or successfully field an out, I am delighted for the boys when their team wins and comfortable with their losses, for I know that statistics rarely ever inform the moment. Statistics only tell us about what happened - in the past!
But that's hindsight; it's wisdom earned through experience. I can also attest to the fact that as a parent, it's always easier to watch your kids powerfully tee off on a ball, than it is to watch them strike out and walk back to the dugout in utter despair (the same is true for one's clients). Watching these courageous boys, I am once again reminded that it takes real resiliency and true heart to stand alone in a batter's box knowing that you are more likely to get an out, than you are to get a hit (Really!). Statistically, baseball is a game of failure. The BEST players in the world are only successful one out of every three attempts.
Not surprisingly, resiliency and heart are important components of Real Estate as well - as are the concepts of "teeing off," "swinging for the fences," and "hitting a home run." They're also realistic metaphors for what's become a very competitive marketplace, as of late. After what can best be described as a "batting slump," during the last several years, the market has definitely rebounded with tremendous velocity and surprising force. The disconnect for many, comes with just how quickly things have changed, how dramatically prices have shifted, and whether or not the new found optimism is here to stay . . . (That's impossible to call. We can only advise you with respect to the market that is here today).
"We love the house and want to write what's fair," one well-intentioned Buyer said to me recently when crunching numbers to craft an acceptable offer, "but we need to be realistic . . ." To which I could only reply, "If 'fair' were all it took, you'd definitely be in contention, but buying a house in today's marketplace has nothing do with 'fair' and everything to do with how compelling your offer is."
The reality is that 'emotionally compelling' homes require 'emotionally compelling' offers. "Fair" doesn't factor into a winning bid AT ALL. (Sorry.)
Moreover, for those who are analytical in nature (and there are many of you) it pains me to say this, but the statistically driven Buyer is always going to be at a disadvantage against the Buyer who is willing to play with his or her heart. Those who buy emotionally recognize that while they may in fact, be paying a premium for the home, at the end of the day, it's not about the stats, it's about obtaining a successful outcome.
As you might imagine, that's news that's not exactly met with great fanfare. No one likes to be told that their offer which is already WELL ABOVE asking, is still well below where it will ultimately trade. (Huh?) For some, it takes far more work than they might have imagined and more than a few "at bats" to successfully get on base. (Think of it as Spring Training.)
What's more, it's likely that the successful Buyers will have waived their appraisal contingency, as the "market" value and the "appraised" value may not actually align. (Take note, you can only take this risk IF you have a BIG down payment OR enough cash reserves to make up the spread.) With homes selling 20-30% above asking in many cases, there may not yet be enough recorded sales to support the quickly escalating figures.
That's not only NOT fair, it can be downright disheartening as Buyers try to catch up to the new reality. Remember, lenders will only fund up to 80% LTV (loan to value) on a property - not on what you, as the Buyer, may be willing to pay. In other words, "intrinsic value" doesn't equal "appraised value," especially in today's more conservative lending environment which no longer gives much weight to the actual market demand. (Appraisers don't factor into the equation the 13 other Buyers who wanted the home as well and were ultimately responsible for driving the sales price waaay UP!)
This is where resiliency comes in. You may have to actually lose a few homes before acquiring the necessary technique, adjusting your swing, and aiming for the open field, before scoring a "hit.". (You're not alone, it's a process almost everybody goes through.) Hang in there, like baseball, there are many innings to play, new opportunities to be met, and happily, the outcome can turn on a dime. And at the risk of being uber philosophical about the home buying process, the near misses, prepare us for the wins.
And if you're thinking of taking the summer off to regroup because you've frankly, been benched one too many times by the Spring Market -DON'T! Summer is typically when many players leave and the competition thins considerably. If you are in a slump and aren't successful this time around, you'll certainly be better prepared to firmly strike the next time up. (Heck, my son went 3 for 4 the other night after a rather dismal spring showing. He stuck it out and it's paying off in his rather stellar summer performance.) Even if you don't hit a home run as the ALL CASH Buyer is frequently in position to do, there is still a good chance that with multiple attempts, you will eventually get "on base." But to do so, you've actually got to get up, swing the bat, and take your chances (don't get caught looking).
"Hey batter, batter - SWING!"
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.