Our homes are often our largest investment. Out of all our assets, they hold a large majority of our wealth. Yet when we choose to sell/buy a home, the process can be lengthy, bewildering, and complicated. All of this is because the real estate market is imperfect.
Now, a perfect market would allow buyers and sellers to be fully educated on the products and be able to exchange them within a timely manner. So why is the real estate market imperfect?
Lack of Educated Buyers
The real estate market is complex and large. Therefore, having potential buyers that are 100% knowledgeable about the real estate market would be nearly impossible. In certain instances, buyers can be taken advantage of due to their inexperience.
Time
Compared to the stock market that can provide their buyers with products within minutes, the real estate market is slow. From listing to closing, many home sales can take months to even years to sell, meaning the market is inefficient at providing buyers with the products within a timely manner.
Yet the real estate markets inefficiency can also be considered a positive too. Consider this, would you want to make one of the biggest purchases of your life within a matter of minutes? Most likely not. The slow-paced mentality of the real estate market allows buyers to thoroughly determine their choices.
Diverse Products
A perfect market would have specific products that could be monitored, compared, and evaluated. Due to the diversity of the housing market and the amount of homes for sale, it is challenging to accurately and consistently price homes. The same exact home could be listed for many different prices due to various opinions.
As a buyer or a seller of a property, do not think you are alone if you become frustrated with the real estate market. Remember, the real estate market is unique in its own way.
By Anna Hellman
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