Real Estate is not a Zero Sum Game

Real Estate is not a Zero Sum Game

 

In chess, at the conclusion of the match, there is one winner and one loser. Pretty simple. Zero sum.   A zero sum game is a term used in game theory to describe both real games, and situations of all kinds, usually between two players or participants, where the gain of one player is offset by the loss of another player, equaling the sum of zero. The win (+1) added to the loss (-1) equals zero.

 

Negotiations in business and real estate, if to be successful, must conclude as “positive sum”, both parties must gain.

 

In Florida real estate and indeed locally here in Fort Myers and Cape Coral, the vast majority of sales are either short sales or cash deals on foreclosed homes.  The rate for foreclosure notices is leveling off, but more and more of these are being absorbed by buyers.  It would appear that many of the sellers are losers and the buyers are winners. This is often the perception in a buyers market, which indeed we are now experiencing.

 

But real estate is not a zero sum game. Florida is going through a normalization of market, a stabilization, if you will.    We know we are close to a stabilized market n residential homes sales when we begin to see increases in prices.  Indeed this is the case in single family homes  in some neighborhoods.

 

Prices for homes are normally negotiated between a willing seller and willing buyer. Short sales , sales of a home to a party for less than a seller owes to a bank,  add a third party to the negotiation; the bank. The successful sale however, is still