Sunday, July 12, 2015

Mission Creep

Mission creep: the tendency of a target or goal to change or evolve as a mission progresses. It's a rare property search that doesn't involve some mission creep.

A typical condo search will usually begin a with a list of important criteria. One's mental image of the perfect ocean condo might be a three bedroom, upper floor corner unit with a two car garage in a complex with tennis courts, pool and hot tub that allows weekly rentals and large dogs. If searching in Cocoa Beach and Cape Canaveral that search is over before it begins as that particular unit doesn't exist. The mission to find an acceptable unit is going to have to creep away from the initial target if it is to ever be successful. There are some criteria or combo of criteria that so limit a buyer's choices that a unit is unlikely to ever be found. If looking in Cocoa Beach and Cape Canaveral for a three bedroom condo that allows weekly rentals the choices are immediately reduced to five complexes. The same shortage of choices exists with complexes that will allow a dog over 50 pounds. Combine the two criteria and you've eliminated all the possibilities. Similarly, making a two car garage a must-have will severely restrict the possibilities. Not impossible but begin to add other unbending criteria and the list starts to dwindle rapidly.

It makes sense before beginning a search to list all the things that are important and to decide which ones are must-haves. A list of pretty units assembled from the MLS or might not contain a single unit that will work because of missing features or restrictions not mentioned in the listing. Talk to your agent about the reality of finding a unit that matches your criteria before putting together a list of units that look good but may not work for you. You might decide that a two car garage is not as important as being able to bring Scrappy Doo to the condo with you. Prepare for the possibility of mission creep. Attractive properties are out there and available for purchase. Flexibility increases your choices.

The fantasy of finding the smoking deal or the non-existent property may be sufficient payoff in itself to stay in the hunt. While that fantasy may be gratifying, the downside may be never realizing the original goal, that of owning. Elizier Yudkowsky wrote an interesting analysis of lottery players and the implications of banking on a fantasy with a probability approaching zero. Partial excerpt from his piece below.

"Some defend lottery-ticket buying as a rational purchase of fantasy. But you are occupying your valuable brain with a fantasy whose probability is nearly zero, wasting emotional energy. Without the lottery, people might fantasize about things that they can actually do, which might lead to thinking of ways to make the fantasy a reality. To work around a bias, you must first notice it, analyze it, and decide that it is bad. Lottery advocates are failing to complete the third step. If the opportunity to fantasize about winning justified the lottery, then a "new improved" lottery would be even better. You would buy a nearly-zero chance to become a millionaire at any moment over the next five years. You could spend every moment imagining that you might become a millionaire at that moment."

Searching for a non-existent property/deal is a form of this "new improved" lottery. Gratification every waking moment dreaming about the possibility of buying the $250,000 upper floor, SE ocean corner 3/2 but never finding it. The prospective condo purchaser who actually wants to buy a unit needs to prepare for the possibility of some mission creep. This is especially relevant right now with inventory of properties for sale at an unprecedented low. The MLS is showing 187 condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning with fully a third having been for sale for six months or longer. The implication is that just a little over 100 units are priced fairly. Compare that to the 1200 unit inventory just nine years ago.

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“Slippery slope. I carry a spare shirt, pretty soon I'm carrying spare pants. Then I'd need a suitcase. Next thing I know, I've got a house and a car and a savings plan and I'm filling out all kinds of forms.”  ___Jack Reacher