I like to keep up with the news as much as the next person. But when you think about it, most news outlets exist in order to make money by selling advertising. So, if the news folks write stories that shock, amaze or simply frighten the %$@#* out of us, more people watch, read or listen and more money is made on the price of advertising. My college journalism professor once told me that “journalism exists to serve the people, because the people have the right to know”. I’m sure he believed that and when I was attending his class at the ripe old age of nineteen, I believed it too. Now, I’m pushing fifty and I know better.While there are many in journalism who take service to the public quite seriously and work very hard to keep us informed, the fact remains that journalism is a business and sensationalism sells! Knowing this, we would be wise at times to take the news with a grain of salt. News about real estate is no exception. In a time of moderate downturn, such as we have now, just about every media outlet begins featuring talking heads and "experts" screaming “the sky is falling”. They think it will get us all to buy a magazine, read a newspaper or stay glued to the business news on our favorite TV network, and they’re right. It’s all about bumping up the ratings or increasing the readership so the sales folks can use those new demographic numbers to sell more advertising for higher prices.
This practice of sensationalism for hire can be very detrimental for those who don’t see it for what it is. Let me give you an example. Have you ever noticed that when a major department store has a sale dropping its prices by 50% everybody goes and buys something? On the other hand, if the same store raises prices by 50% nobody shows up. However, with real estate the opposite is true. When prices drop significantly (or even slightly) the media talking heads start screaming “the sky is falling” and people stop buying. But, when prices go up those same “experts” loudly proclaim that “prices will be out of reach soon so you better buy now” and everyone can’t seem to buy property fast enough! My Grandpa Charlie taught me about this lunacy when I was a small child and drilled it into my head as I grew up. He always said, “Joel, if you want to get it right sometimes you just have to look at what everyone else is doing and do the opposite”.
Grandpa Charlie was an old time real estate broker and investor. When I was about seven, he folded the real estate section of the newspaper he was reading while resting in his giant leather recliner, looked down his nose at me over his spectacles and said “Let’s go for a ride, Joel”. I asked, “Where are we going, grandpa?” He got that big smile he always got when he was ready to teach me something and said, “We’re going to look at some properties today. Real estate is having a sale!” My Grandpa figured out what most everyone else hadn’t. Just like the department store, when prices of homes go down, real estate is having a sale. The difference is that in the case of real estate, not very many people take advantage of it.
So, I ask myself ... why is this still the case some 40 years later? Why, in a time of low unemployment, a strong economy, low interest rates, lots of homes to choose from and sellers who are willing to deal, are buyers staying home instead of taking advantage of the fact that real estate is having a sale? The simple answer is this: human nature hasn’t changed. Most of us take what we read or see on television as gospel and feel much safer doing something if we see that everyone else is doing it. The problem with that kind of thinking is that sometimes to get it right, you just have to look at what everyone else is doing and do the opposite. Just so you know, everyone else is staying home and waiting for people to start buying again. So, as you sit there reading this article, imagine that I am looking at you over my spectacles and inviting you to go for a ride and look at some properties because, believe it or not, real estate is having a sale!
No comments:
Post a Comment