Sticker shock. Just saying those two words evoke memories, some positive if you are on the selling side, but more often gut-wrenching if you are on the buying side.
I try to remember to brace myself when I am looking to buy something that I haven’t needed in a few years. Prices go up, I know, but it seems like I am never quite prepared when I’m the one who is looking. Real estate is usually the largest purchase or sale that most people make in their lives. And it certainly isn’t an annual ritual. So when it’s time to jump into the market, whether you are buying or selling, prepare yourself for that jolt called sticker shock.
I imagine that psychologists have techniques to deal with this type of anger management. But honestly, it’s impossible not to react immediately when hearing a price that sounds wildly inflated, at first. There are times in my life that I insisted, “I’ll never pay that for that, are you kidding?” Then at some point, I will pay that for that and then some. How does this happen? I have some vivid memories.
Bottled water was the first enigma for me. Montana has the best water in the world. I had lived here for many years already when I heard they were bottling water and selling it for $1 somewhere in the U.S. I was astounded. Never, I said, never could I imagine shelling out money for water, let alone $1 for a few ounces. In conversations with friends, we discussed how foreign the notion was to buy water in little plastic bottles. We daydreamed about making our fortunes by turning on our kitchen taps and filling jugs.
Then Mark and I took the boys on a trip of a lifetime to Disneyland. And crazy as it seemed, we opened our pockets and purchased water for the entire family. We were thirsty, the tap water was undrinkable and we were on vacation. Being away from home makes the unthinkable a little easier to manage.
The first step in calming your sticker shock is to go somewhere else and see what they are paying for things. You may either decide that you live in a very expensive area or one that is, after all, fairly reasonable in comparison.
Coffee is another daily drink that costs far more than I could have thought it would. I have seen old black-and-white pictures of diners with paint on the front glass window advertising for coffee and a piece of pie. I know that a cup of coffee for 5 cents is from a time long gone. But what happened in between? How did it go from a nickel to a five note? The first time I saw that, I said never would I pay a ransom for a cup of coffee.
Once again, traveling to Seattle we bought our first top-dollar coffees. They were wonderful, perfectly brewed, magnificent cups of caffeine. I still only tiptoed into that type of purchase on a vacation for a treat.
Ice cream cones that cost several dollars? A piece of cheesecake for the same price as a steak just a few years before? Somehow though, the prices have a way of sneakily settling into the back of my mind and the next time it isn’t quite so bad. Soon I find myself being extravagant and saying, “cones all around on me!” and put it on the American Express.
Real estate is just the same, but in bigger numbers. I have a vivid memory of sitting in our home, when Mark said, “Can you imagine, there is a house down the street selling for over $100,000?” That price hit another new mark. More money than we could imagine for a home in our neighborhood. Today, people would line up down the street if that home was priced at only $100,000.
Prices go up, as does the cost of living. Sometimes though, for each of us personally they may go up at different times. How do you come to understand and become comfortable with the price of a purchase? First get to know your market inside and out. For something like gasoline, this is easy. There is even an application that you can upload to your phone to find the best place to buy gas. In real estate, it will take far more work.
Montana is a nondisclosure state, which means that sellers do not have to disclose the sales price of their homes to the general public. If a home is listed on the Multiple Listing Service, which can be accessed by licensed Realtors, then a member of that MLS can furnish an owner with a market analysis of values of similar homes that have sold.
An owner should also talk to neighbors. Word of mouth can be tricky in some regards and also very informative when talking to someone who has lived in the vicinity for a long time. People keep track of home sales just to have a value of their own home in mind. The key is to take all these pieces of information and compile them so you can understand a realistic price range for your home. If you are moving, it is imperative to do the same exercise for where you are going.
You will want to travel to your new town. Find professionals and locals you can trust. When you head back home, you will want to be sure to keep up on that market information accurately. After a while, the sticker shock will wane and the prices that once stopped you in your tracks will start feeling correct. You still may not be comfortable with the numbers you hear. Eventually, you will figure out how to move forward with your plans if you are able.
My first car cost less than $1,000. But that was a few years ago. I don’t buy new cars often, so each time I walk on the lot or start looking at ads, I take a deep breath. Cars cost today what homes cost yesterday. I know that clearly. No matter how I prepare myself, it always feels a bit like the cold plunge at the hot springs. Somehow, though, I always move forward and find a way to make the purchase.
Joy Earls is a broker/owner of Joy Earls Real Estate. She can be reached at 531-9811 or email@example.com.