I'm seeing a new real estate marketing trend, and the ignorant nature of it is alarming to me. To clarify, there is no such thing as "priced below fair market value" unless you're considering the value on a tax bill. And if you're thinking about it that way, know this - the value on the tax bill has nothing to do with actual market value. A property can be sold at "30% off previous market highs", but when it sells, no matter what the price the property closes at, that is now fair market value. Realtors are quite fond of this "below fair market value" catch phrase lately, and it's troubling to me.

The term is gaining in popularity as Realtors struggle to convince gun-shy buyers that the property they may be buying really is a good value. As much as I hate this new marketing term, I can't really fault the brokers who are employing this verbiage in their advertising. See, buyers are proving to be a difficult lot lately, a newly minted group that would rather vacillate between interest and nonchalant annoyance than they would pursue opportunities and take advantage of them. Consequently, Realtors are cooking up all sorts of catch phrases to attempt to restore a little motivation to the buying demographic. The #1 and #2 marketing phrases of the last 24 months have been "foreclosure" and "bank owned", and both have proven quite effective at motivating an otherwise unmotivated consumer.

Fortunately, the Lake Geneva vacation home market hasn't had many occasions to use those two hip marketing phrases, even though we might have a significant increase in volume and buyer interest if we were to prove to be a foreclosure prone market. Signs of strength and stability in a marketplace are no longer viewed as positives, rather they're viewed as a frustration, and buyers would rather seek out value in markets that have proven fickle and extremely volatile as soon as the first blip of economic trouble appears on the Vexilar sonar. Stability is an ugly world in a new marketplace where volatility is sexy, and 50% price drops signal opportunity instead of proof that a market is unable to withstand any adverse economic pressures. Those markets where prices have plunged might seem attractive over a vacation home stalwart like Lake Geneva, but what happens in 15 years when the cycle repeats itself? What happens to your terrific deal when the market that you bought into proves yet again to be unable to withstand a downturn in the national housing market? I'd prefer value and historical stability over perceived value and volatility, but I'm just a kid from Lake Geneva, so what do I know...

I guess I just talked myself into an understanding of why Realtors are flocking to the "below market value" terminology, but understanding it doesn't mean I agree with it. The term is going to be everywhere this year, and unfortunately for those using it, it's a term that has very little meaning. Buyers, try not to get caught up in this vague marketing ploy, instead look at the price as it compares with "previous market highs". That would be a more accurate way of determining where a property has been and where it's heading, and now that I honored the phrase with a mention in this blog, it's also a term that you can expect to see more of.