Of course if the Seller is desparate, that is different and all bets are off as to what that seller may accept.  But what if the Seller is motivated for one reason or another but not desperate.  How doe deals go together then?

As always, both parties need to recognize the market for what is is at the time they are negotiating the deal.  The buyer can’t be thinking that prices will be 20% lower in a year if they need to buy now.  The seller can’t be dreaming of the money he isn’t getting that he would have received a year ago.  Only the hear and now  count when putting a deal together.

Many buyers remind me of the old Groucho Marx line that he would never join a country club that would accept him as a member.  That is, these buyers typically worry if they make a low offer and it is accepted.  Now they start obsessing that they simply overpaid and that they are unmitigated jerks.

If one is knowledgable and has studied the market and predetermined what a good deal is, than they have a very good chance of buying a property.   On the contrary, if they do not know the market and they what to see blood gushing from the seller before they will do the deal they will never buy a property.

Even in the marketplace I am still speaking to property owners who feel they have the golden goose and that their property is like no other. Of course they expect buyers to pay much higher prices for this prized piece of real estate. When that happens we can kiss the deal goodbye.

So the moral of this tale is to negotiate in the market in which you are negotiating in. Not the land of Oz. It also helps to know what is going on in the market in which you are negotiating.

People are talking about the slow down of sales not only in residential housing, but in commercial real estate in general.  What you don’t hear much about is the demand that is becoming pent up by buyers hoping to invest in commercial real estate.

When dealing in homes we all know there is a dearth of buyers because home prices are still declining.  Why buy a home that will almost assuredly be worth less in a year from now than it is today?  Good question with no especially great answer forthcoming.

Dealing in commercial properties is really a different matter even though it is being shoved into the same basket as housing.  People are really afraid to go into the stock market.  Every day there is more bad news regarding stocks and the economy.  Every day another captain of industry bites the dust albeit with a  severance package most would kill for.  The investor has very good reason to fear where the market is going in the next 12 months or more.

Commercial real estate does not have those great drops in value or battered returns.  True, some office buildings are getting smacked with vacancy rates that have risen significantly in the past year. However, even in those cases most have such a cushion built in them that we have not seen even this catagory of commercial property going into foreclosure.

Then why the slow down?  It’s simple.  Property owners have been doing so well with their properties in the past 5 or 6 years that they aren’t pushed to sell.  However, if they really wish to they can sell easily by simply allowing the buyer to achieve a modest return.  This isn’t really a very painful or costly move for most sellers. 

The fact is that by pretending this is still 2004 or 2005 they are missing an extraordinary chance to take some significant profits.  They are betting the farm that the market will go back to rapid run ups in value in a year.  In my view that is very unlikely to happen at least for a few years.  Investor psyches have been severely impacted by what has been going on in the economy in general.   They have learned a very hard lesson, once again, that they simply cannot get sloppy or emotional when investing their money. 

The encouraging news is that more sellers are starting to realize that even though their property is not worth the pie in the sky number they have attached to it, it is still worth a hansome price.  If this idea continues to take hold we will once again be back in a market that is more than fair to the seller and gives the buyer a reason to invest in real estate.  Hang on because I think we are getting there.