Time is money. Money can buy time. In virtually every activity of our day, the choices we make involve a consideration of the cost in time and the cost in money.
The Malibu real estate market is founded on these two assets. In fact, all statistics to measure the marketplace involve those two factors. During 2015, over the course of 12 months, for example, the median price of a home sale in Malibu was about $2.8 million. A measure of money over a period of time.
Every individual makes decisions regarding real estate that involve the weight of time and money. That includes many who do not invest or ever buy a home. They are making a decision that the money they have, at least at that time, is not enough to purchase the asset they wish. Instead, they rent, and pay money to a landlord over time.
In negotiations, the weight of time and money is everything. The result of a negotiation, including one that ends with no deal, is the result of the two parties, separately and privately, measuring their time and money parameters and positioning themselves accordingly. A buyer may successfully wait to spend the money they have available, which is always in a state of flux, as long as the values are not moving away from their capability. If a buyer suddenly has extra funds, that may accelerate the moment of decision to pounce on the house or condo they desire.
Most interesting is the behavior of sellers in the real estate market, something I have been studying for my 28 years in the business. My final conclusion is that half the time sellers behave in a smart way. Half the time they are just plain stupid.
Of course, sellers do not know what is going to happen in the future. Nevertheless, the one universal truth of a person or party selling a home is they believe that time will probably work in their favor. They believe that time equals money. Almost everyone believes that at first. But it is not always true.
In good markets, it makes sense. When the prevailing trend is that the value of property is increasing, a person selling is confident that over more time, more money can be gained.
Why, then, does that person ever sell at all? The obvious reason, that they determine separately and privately, is that they do not have the luxury of time to wait. They need or want to sell soon for whatever private reason they may have – a job change, wanting to scale down, anxious to move to a different lifestyle. In the end, time is such a valuable asset, it trumps the potential of waiting for more money. Going a very long time without anyone wanting to buy your house is rather disarming.
It is an underrated and undervalued aspect of negotiation. Often, in fact, time is more valuable than money.
Hundreds of times, I have witnessed Malibu owners sell a home for much less money than they should have. Or, less than they could have. How does that happen? It is because for much of the time, money was more important to them. Then, they change their value choice to a preference of time. This is the frequent behavior of a person who puts their house on the market at a ridiculous price, whether by ego, or stupidity or just mere wishing, and when it does not sell over a long time, suddenly they need or want to sell more badly. Time has taken its toll.
The best deals a buyer can make is often from a seller that started too high in price and has lasted on the market a long time. To make up for lost time, that type of seller may give up the most money in the end. It is a quirky but inevitable fate. The cost of asking too much, unbeknown to many sellers at outset, is that they grow exhausted over time and their passion for money disappears in the end. Ultimately, selling as fast as possible becomes the priority.
Sellers, before hitting the market, should make a decision of what is important to them, time or money. In the current market, which is clearly demonstrating stable prices, many sellers feel they have time and do not need or particularly want to sell. They won’t, most assuredly. The money is more important and since they will not get the money they desire, they will make use of the time. Other sellers are in the opposite situation. They do not have the luxury of time. And the longer they take, the more frustrated they get, and less concerned with money yet. In a market like this, the money you get now may be better spending less time, with the time lost by trying to get even more later.