DURING the residential real estate boom, in the seller’s market that once was — do you remember it? — the wildly high returns and the low inventory meant snap decisions and swifter deals. There was no dithering, no backing out; no room, really, for second or third thoughts. There were attendant stresses and ruts along the path to selling a home or buying one. But more often than not, a deal was done, for better or worse.
Today, with credit unfrozen and prices still low, some home sellers and shoppers are having a change of heart, in many cases at the 11th hour — a course swivel that stuns all involved.
It might look like a failure to launch or an inability to pull the trigger. But as houses and apartments have become “homes” again, as opposed to “real estate,” all the complicated and powerful feelings people associate with their homes — “the place you store your memories,” as Kit Yarrow, professor of psychology and business at Golden Gate University put it — have space again to bloom and, sometimes, entangle.
Late last spring, Robert J. Russell, a real estate agent with his own firm in the Dallas area, was caught off guard by the phone call, the terse and embarrassed communication between seller and broker when said seller is about to unspool a deal. Mr. Russell, who lists properties with Realtor.com, had negotiated a full-price offer of $240,000 for a red brick two-story house belonging to a couple in suburban Dallas. All were poised to sign, he said, when the wife called to say she and her husband had cold feet. “The buyers couldn’t understand because I had no information from the sellers,” Mr. Russell said, noting that he asked if there had been a job or lifestyle change. “I can only assume that they either got scared or they were testing the market.”
Around the same time, Jed Schwartz made a similar call to his broker, Lisa Conway, a senior vice president at Halstead in Manhattan. As he tells it, Mr. Schwartz, an information technology manager, and his wife, Lee, a retired teacher, had arrived at a familiar turning point: their daughter was at college, and they thought it might be time to shake the tree a bit.
They’d been living in their Greenwich Village apartment for over 20 years and had the clutter to show for it. What would it feel like to live somewhere else? They had a place in the Berkshires, and a new home on the Upper West Side would shorten that commute. They had always loved Park Slope, Brooklyn, and perhaps they could have more space there. “We were sort of opening our minds,” Mr. Schwartz said.
When they met with Ms. Conway, she said she couldn’t list the 925-square-foot two-bedroom apartment until it had been redone: the wall-to-wall carpeting ripped up; the floors refinished; the walls painted a crisp white. “It was like Victorian meets early hippie,” Ms. Conway said. “It needed to be updated.”
She worked hard to stage the place, shopping with Ms. Schwartz at the Door Store, directing that a sectional couch be cut in half, that the Schwartzes prune their belongings way down. And when they were finished, all three agreed that the place looked wonderful. In mid-May, Ms. Conway listed the apartment for $879,000; last week, when she called to schedule an open house, Mr. Schwartz said that he and his wife had decided to stay.
“We thought we needed a broker,” Mr. Schwartz said. “We just needed a decorator.”
Ms. Conway added: “I did too good a job.”
A month earlier, and farther uptown, Cornelius Dufallo and Amy Kauffman, concert violinists with a 3-year-old daughter, had been ready to sign a contract for the sale of their bright two-bedroom apartment on the Upper West Side when they, too, had a change of heart. Their broker, Francisco Menendez, a vice president for sales at Barak Realty, had brought in a professional stager who recommended accent pillows, rearranging furniture, that sort of thing. And they had committed buyers, a couple eager to take advantage of the $8,000 stimulus tax break that expired April 30. But, Mr. Dufallo said: “We panicked. We just realized we were about to throw away a really good thing.”
Dr. Yarrow, who studies consumer behavior, called the reactions “wedding jitters,” explaining the push-me pull-you effect of a squirrelly economy. “People are making long-term commitments, and they have limited vision into the future,” she said. “That’s what the market is giving us right now. Fear of loss is super powerful to consumers — that fear of losing your house, or your money, is keeping them jittery a lot longer. It makes sense that people will think a lot longer about selling their house, even pulling out at the last minute.”
By the end of last year, Amy Rea, an associate at Halstead, had four deals evaporate when the sellers (all, coincidentally, single parents with small children, three in the same Upper West Side building) realized that the homes they were in, while small, were just fine, thank you. Unfortunately, it took the process of preparing their apartments for sale for these owners to realize that the value of their homes wasn’t just monetary. (In the case of one woman Ms. Rea represented on the Upper East Side, there was a full video tour, weeks of advertising and the attendant costs, in the thousands of dollars, and an accepted offer.)
“It wasn’t so much the market, but the economy,” Ms. Rea said, indicating that in each case, the single parent felt pinched by work and family responsibilities, “each one in the end figuring that there’s no place like home.” She added: “What are you going to do? I wanted each one to be happy. After all, I’m a single parent, too.”
The woman on the Upper East Side, Ms. Rea said, was living in a one-bedroom apartment with a 2-year-old and planning to move to a bigger space in a different neighborhood. She accepted an offer that was $35,000 below the asking price of $525,000, but before the contract was signed, she called Ms. Rea to say she had changed her mind. “It was a very short phone call,” said Ms. Rea, who learned the full story behind the decision days later. “I think she realized her job was a dead end, and that she would have to go back to school. Better to size down and suck it in and stay where she was comfortable, and in a good school district.”
Ms. Rea is philosophical. “You have to be,” she said, noting that in 5 years of sales (and 11 years in the business), she had never had a deal unravel before last year.
What really makes brokers crazy, though, are the shoppers who never pull the trigger — and, by all accounts, they have been out in droves over the last 12 months. Social psychologists have shown that too much choice can paralyze a consumer. Certainly, the flood of inventory in the last year, the low prices and the low-interest rates have created a Chinese menu effect of too many options that can cause some would-be buyers to freeze.
Or make them slightly crazy. Mr. Russell, the Dallas-area agent, recalled the case of a newly divorced female client who went in and out of contract on seven houses. A standard clause in purchase and sale agreements in Texas allows a buyer “to pull out within the termination-option period” — typically 7 to 10 days — “ for any or no reason at all,” Mr. Russell said.
He continued: “Just imagine, we look at 10 houses, 20 houses, and then she says, ‘Robert, I’ve found it, let’s make an offer.’ And we go back and forth with the seller, ‘We can’t close this day, it’s got to be that day, we can’t do this, please fix that.’ Now imagine that scenario seven times.”
How did he get to seven?
“Well, I’m not going to give up on people,” said Mr. Russell, who like most real estate agents is something of a fatalist.
Ultimately, he did. “I told her, ‘You’re not serious about buying a house or you would have bought one of the first seven.’ She said, ‘Why don’t you think I’m serious?’ I said, ‘No one makes an offer on seven houses and backs out. If you’re not sure, don’t make an offer.’ ”
Her answer, he recalled, was a plaintive “but I’ve liked every house we made an offer on.”
He added: “That’s when I got my gray hairs.”
Paradoxically, the $8,000 tax credit has confounded many would-be buyers. In March, Tom Thornton, a real estate agent in Austin, Tex., was contacted by two different 30-year-old male shoppers drawn into the market by the tax credit, but who stopped their search right before it expired.
“Each had six weeks on the clock, and one wrote two different offers before pulling out,” he said. “I think the perfect storm of low interest rates, the bumping on the bottom of prices and the tax credit brought out a lot of first-time buyers who weren’t quite ready mentally or financially but felt like they had to make a move.”
Mr. Thornton added, “I heard from both of them later that they had some fear of loss — financial loss, but loss of freedom, too.”
Pity Maria Picardi-Kenyon, a RE/MAX agent in Mercer County, N.J., who showed 68 houses in the low $100,000 range to a couple who were galvanized by the tax credit. “They were on the deadline, and at the last minute we found them the perfect home,” Ms. Picardi-Kenyon said. “Then they decided they didn’t want to be pressured into buying because of the tax credit. They didn’t want to be forced to buy! I burned more in gasoline than I would have earned in commission.”
Ms. Picardi-Kenyon said the couple wanted to keep shopping with her, but she delivered what she calls “the talk.”
“I told them we’d come to the end of our relationship,” she said. “I wished them the best and walked away. They still e-mail me, and I don’t respond. It’s all about tough love.”
In Moorestown, N.J., Arleen Shabel, an artist, is practicing tough love on her husband of 48 years by gearing up to put their house on the market next month for a third time.
She recalled the second time she and her husband, Norman, a lawyer and a writer of thrillers, listed their house about a year ago. During a showing to a “very interested” prospect, Mr. Shabel ran to pull the “For Sale” sign from the lawn.
“We’ve been here for 23 years and it is our dream home,” Ms. Shabel said, describing a 7,000-square-foot house they designed themselves. “So it’s hard for him. But next month, if I can get it decluttered, it will go on the market for a third time. And if he backs out, I think I will kill him.”
Wednesday, June 09, 2010