As I was working with a couple of new buyers in December, I realized that every home buyer I meet has it in their brain that whatever the home is listed for is simply too much for this market.  It doesn't matter what house, or where it is, or what condition it is in.  And the even more odd part is that everyone seems to think they need to be $20,000 less than the asking price, so that they can "negotiate their best deal". 

Everyone is eagerly waiting for the housing market and the economy to improve, yet we continue to drive down housing prices to "get the best deal".  The fact is that when you purchase the home, the price you pay becomes the value of that home.  There are a few exceptions to this rule, but most buyers do not fit this category.

A great example: buyer decides the home is the right place for him and his family.  He needed 3+ bedrooms and 2+ baths and wanted a home big enough for his mother in law to move in later (split level with sperate area down stairs).  The bank that owned the home completely painted the interior and replaced all the flooring, and the water heater was new.  The price? $129,900 and they would pay 3% towards the buyer's closing costs at full price.

First we had to discuss his budget versus his needs and face the reality that what he wanted and needed was indeed going to be tough. You see, they needed FHA/VA conditions for the loan they were using, and the budget allowed $130k max.  I knew I had a tall order to fill.

So imagine my surprise when after finding this seemingly ideal home at the price needed for the budget, the buyer decided that he wanted to offer $100k and have the closing costs paid.  Oh yeah. There is one more tidbit.... it is day 2 on the market.  I asked why he felt the price needed to be $100k with all the bank had done to make the place meet all the needed standards, and was told the location was not the ideal location for what he wanted..... for $130k. 

I began to think about why this sort of thing kept happening, and then yesterday I happened to catch an episode of a show on one of the cable networks where a "expert" travels the country to make a reality show about property purchasers with no experience.... and every example she showed was the same technique. 

I do not see how we can ever solidify the market if we cannot come to grips with paying the asking price of a quality home when it is more than reasonable.  This exact mentality people have (making money buying and selling homes) is why we are where we are.  Can we please see a home as a place to live again rather than some investment instrument?  Perhaps this change in attitude will actually make a home an investment again, but until then, I am afraid we will continue to slide our values into the great equity abyss.