Crazy Buyers
By Jim Palmer Jr.

A few days ago I received a call from someone claiming to have interest in buying a certain property that I had listed.  They had driven by and had seen the real estate sign with my name on it, but didn’t know what the price tag was yet.  When I told them the listed price they cursed and told me it was way over priced.  “Somebody is crazy if they buy that!” was their exclamation just before they hung up on me.

This type of conversation is not uncommon in this business, especially in this market where prices can change quickly.  In one scenario a broker did a market analysis for a property owner on a home on acreage.   As he studied the sold properties data, he realized that on the four properties he was using to compare to the subject property, each property had been listed at a price significantly below what they had actually sold for. The average difference between the sold price and the listed price was about $40,000 above asking price.

Were they crazy to pay that much? Of course, to the tire-kicking buyer in the example above, the property was not worth anywhere near what it actually sold for, but to the actual purchaser, the new owner, (the crazy one) it was worth every penny.  The difference is that the one who stepped up on the price has a place to live and the other one will never own that property!

In another example, a manufactured home was listed for sale at a price well above what the listing broker thought it would go for.  It was a plain and simple home with only 1,300 square feet on ten acres of land.  Because of the high demand and the low inventory, many buyers viewed the property in the first few days of the listing and walked away, all stating that it was overpriced, but after about a week, a buyer came along with cash in hand from another sale and paid more than the asking price.  He needed a place to live!  It closed and became one of the sold listings we now use as a comparable for other market analysis.  The “crazy buyer” is the proud owner of this property while most of the other buyers are still out there looking.