Rational Vs. Irrational: What a Difference That Makes

"Irrational Exuberance" led us into the credit crunch and mortgage crisis as thousands upon thousands of irrational buyers set themselves up for foreclosure failure. Now for the good news: it will be the "Rational Exuberance" that will very slowly pull us out of this turbulent period of ‘the real estate cycle downturn.”

Buy low and Sell low should be your motto. For example: if you are holding on to a Las Vegas high-rise condo unit that you purchased in 2004 and closed in 2007 at $400 a foot, be prepared to hold on to your unit for three or four years to break even on the price point.

Did you want to hear that? Well, that's my opinion, I'm not stating any facts here. But it looks like we are in for some heavy turbulence with California throwing up thousands of more foreclosures in our laps. Add up your mortgage, insurance, HOA, and other fees and if it doesn’t pencil for you, then dump it. Don’t stress yourself out over a burden you can't afford as Suzy Orman would say.

The rational people waited for the downturn and are now picking up some crazy deals. In fact, I heard one Strip view/high-rise fully furnished over 1,700sf at Panorama went in the $500’s. If you are stressed and a buyer comes in offering you cash (plus paying everything at closing including HOA and Utilities) so that you never have to put out another dime and save your credit, my advice is well… live and learn. Perhaps look into safer investments in the future.

Learn from the rational buyers who purchase only on the downturn. Find a real estate agent who is savy and tough (and well respected). Here are guidelines that the Rational Exuberant follow:

When you request information from a knowlegable real estate agent, and the agent responds with that requested info, acknowledge the hard work - whether you are interested or not. REAL ESTATE AGENTS - THE GOOD ONES - WORK THEIR BUTTS OFF AND DESERVE RESPECT. Yes, I said "respect". Because I guarantee that during the rebound period, if you don’t treat your good, hard working Realtor with respect, you will most definitely miss the good deals. (Surprisingly, the good agents seem to know how to find them while the rest aimlessly search the MLS).

Remember, its NOT all about the deal and patients - relationship with a great agent is key. Do not get overly emotional or irrational. Follow the rules: get pre-approved, stay within your budget, and of course - be rational...