So many brokers are scratching their heads right now, as they’re dealing with the gap between what buyers now want to pay when purchasing property, vs. what the sellers still want to receive for their property.

The sellers, although they might never verbalize this, oftentimes seem to be thinking, “I thought my property would always continue going up in value, so don’t blame me if I didn’t recognize that we were at the peak of the market.” In addition, in following along these same lines, many sellers still want to be paid what their property was worth at the peak of the market, but the buyers now have different ideas on value.

Then I’m also hearing people say things similar to, “We expect that the great real estate market will return once again during the second half of the year”, and I’m wondering what, other than pure hope and wishful thinking, is getting these people to believe this.

Because historically over the past 44 years, once we hit the peak of the real estate cycle, it has taken us 10-18 years before we return to the next peak in the real estate cycle. I’m describing what we’ve experienced here in Southern California, but I have to believe, for the most part, that the rest of the U.S. has followed similar patterns, with maybe some adjustments along the way with respect to the exact timing of this.

With this in mind, for example, we hit peak values in the real estate market here in approximately 1979, 1989, 2007, and now most recently, in approximately 2021. Then immediately after these previous peak cycles, we experienced a gradual decline in real estate values, that lasted for approximately 5-6 years each time, before we hit bottom, and then we began the slow climb back upward again.

So these people who seem to believe today that rising property values will begin returning once again during the second half of this year, have no basis in fact for believing in this, based upon the historical evidence over the past 44 years.

I would be absolutely thrilled if the hot market returned once again during the second half of this year, but based upon our historical evidence, I would be stunned if this ends up happening.

So what do you do with these owners who still insist on selling at the price they could have gotten for their property at the peak of the market, when interest rates were still lower? Well, first you need to determine if they have an underlying motivation to sell at the best price they can ultimately obtain for the property in today’s market, or if they’re someone who won’t sell unless they get yesterday’s peak price today.

With this in mind, consider asking an owner, “If you can’t get someone to pay you the price you are looking for, and you still own this property five years from now, will there be a problem with that?”

Then if they tell you, “We don’t care if we still own this property five years from now; we’re only interested in selling if someone will pay us the price that we told you we want”, that’s not a good sign for you, and recognize that you are dealing with owners who may not be selling for years to come.

But if they instead respond to you by saying something like, “No, we can’t hold onto this property for another five years, because we have plans for the money we’re going to receive from the sale of it”, this is a better indication that they’re more motivated to sell the property at the best price they can obtain for it within the coming months.

In addition, with so many properties having loans that will be coming due, and with owners not being able to refinance at the terms that will work for them, there will be some owners who will now need to sell their property because of this.

So when you’re talking with your owners, and they indicate that they have an underlying need to sell, talk to them about how the real estate cycles have gone up and down historically. Utilize the information and the specific years that I’ve mentioned above, or adjust these years to reflect what has happened in your own local market, and then show your owners that historically, once the real estate market begins to cool down with sale activity, that prices will decline for approximately 5-6 years, until they then hit bottom.

Then point out to them exactly where we are in the current cycle, now being at the beginning of the downturn, and then ask them, “Based upon the historical data that I’ve just shown you, and in understanding where we now are at the beginning of this market correction, how much less do you think buyers will be offering you for your property, six months down the road?”

Your goal is to now convince them, based upon the historical data, that if they don’t accept the best price they can get for their property right now, that this may be the best price they will be offered for years to come.