Have we hit the bottom of the market? This month has been the single most profitable month for deal closings in quite sometime. The people in our program have seen a substantial spike in closings this month. But does that tell the whole story? Is this month simply an anomaly and is the market still headed further down?
Before we dive into this discussion, below is a video of Joe from Chicago coming to you from Cabo, Mexico, where he went on vacation after closing his first deal last week. Call it a little inspiration for you to keep your eye on the prize. I can’t speak for everyone else out there, but I know our people are closing deals and it’s changing lives. Watch this:
So back to our question, have we hit the bottom of the market? Each area is different and some were hit by the bursting of this bubble later than others, so obviously, it’s difficult to provide an answer that is applicable to all communities across America. What we are starting to see is that the replacement cost of real estate, meaning the amount to buy the land, hire the workers, purchase the materials and build the property far exceeds the current market value. Therefore, the prices are getting so low, buyers are beginning to step back in. Picture a reverse auction whereby once the price begins to dip below a certain threshold, buyers begin to make bids.
Our philosophy on selling real estate all along was, has been, and continues to be, price, price, price. If the price is low enough, there’s always a buyer. We are beginning to see where that basic truth is beginning to play a major role in the overall real estate market. Prices are so cheap, it is bringing buyers out of the woodwork.
However, the amount of shadow inventory is gigantic and continues to grow. This gluttony of soon-to-be available property should ensure that there is not a spike in real estate values anytime soon.
As you can see, we evaluate the market based on our experiences in the field. I like to say that I graduated from the school of hard knocks and my school colors are black and blue. My team of coaches, our students and myself are out there everyday closing deals and we see what’s going on from the field, not the stadium.
Therefore, we tend to see things that others do not see who are simply spectators, not engaged in the day to day operations of closing real estate deals. We see opportunities very often times that most over look.
In conclusion, Warren Buffett said to be fearful when others are greedy and greedy when others are fearful. Now is the time when others are fearful. Now is the time to be greedy. Now is the time to get out of the stands and onto the playing field of real estate.