Monthly Archives: April 2021

What, you mean TALK??

Hello everyone. Here I am writing a blog entry to talk to you, rather than using my voice. Isn’t that ironic? Here’s another thing: That picture of me? Old picture. I can’t figure out how to change it.

I wish I could speak with you face to face (notice I said WITH you and not TO you), but unfortunately I haven’t met you yet. Hopefully I will.

It occurred to me this morning while I was exercising (no eye rolling; I really was exercising), the heightened importance of communication in this particular market. Remember I told you that we are in an historical market. Never been experienced, hopefully won’t be again. It is a feeding frenzy out here in the real estate world, and the balance of power has been eliminated. Not tipped; eliminated. Sellers have ALL of the leverage; buyers have none. Yes, homes are selling in the first 24 hours of listing and yes people are paying through the nose for that house, but the market is not fair right now and I’ll tell you why I believe that statement to be so. This will lead me back to the subject of the title. You know I like to wander.

First and foremost for me, is that first time buyers, first time move-up buyers, and downsizers are effectively shut out of the market altogether, unless they have a big fat savings account. These days, who has that? Right. Not many. You’re right there with me. You know about me, that first time buyers are my ‘first love’ in real estate. Most of my first time buyers are incredibly excited to have saved enough to pay their closing costs; they cannot throw thousands and thousands on the table in order for their offer to even be CONSIDERED. I’m seeing thousands of sad faces in my mind right now, thinking about how this market has closed the door on them. I don’t like that. At ALL.

First time buyers, you say? That’s right. Not the most money, but a great blessing to serve them. And by they way not ALL first time buyers have limited funds. Some these days are doing quite well for themselves. And I do work in all price points, but the first timers have the biggest part of my heart.

Second: Houses are selling WAY above appraised value, and having lived through the 2008 crash, I know that years from now…YEARS.. I’ll be presenting listing information to some people who are upside down in their home because they paid such a dear price for it. The market is overheated…due to supply and demand, which is legitimate…and this kind of heat can’t sustain. This scares me because I lived through this once before. But…this is also the market, working.

Third, I get to see the worst of our current social conditions, in that greed has dissolved in the solution of society to such an extent that humanity and greed are indistinguishable. In most cases, it has become a ‘how much can I get?’ rather than ‘how can I be a good steward in society?’ In other words, when the power landed exclusively in the sellers’ hands, many sellers stopped caring whether they sold to someone who would appreciate the flower beds, or who would appreciate the proximity to cultural events, or love the house, for example. It’s all about the money, ladies and gentlemen. And that money is in the form of elevated offer price and HUGE due diligence checks…just to have your offer in the running! No guarantees it will be ‘the one’. And that brings us back to ordinary working folks (like me) who can just sit down, read a book and KEEP SAVING.

Let me just qualify that last paragraph a little bit by saying that back in 2010, around the crash time, buyers had all of the leverage; sellers had none. Sellers had to BEG buyers to choose their home. And if a buyer DID make an offer, they were BRUTAL in their requirements of the seller: Below list price offer, low or no due diligence and earnest money, paint the whole house, put on a new roof, put in new appliances, put in new landscaping. And sellers did it, just so they could sell. Some sellers paid thousands just to get their home sold. What does this all mean? It means absolute power corrupts absolutely. Not my idea. It came from this quote by Lord Acton: “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” But you get the idea. You give someone a huge imbalance of power and you are at their mercy. Period. Oh how I wish it were not so. But humans are humans. And so now, buyers are at sellers’ mercy, so to speak.

So…all of this said, it is IMPERATIVE that buyers and sellers, sit down and TALK with your real estate agent. It is so very important that you understand the environment into which you are about to step! Don’t think you can just read something on Zillow or Realtor.com, for example, and have the slightest clue how to navigate these waters! Listen, those are great websites. I use them all the time. But they can’t make you a licensed professional real estate agent. You know, if you go on a beginner white water rafting adventure, as a BEGINNER, you are likely to experience a 20 foot drop. As a BEGINNER. Keep that image in mind when you start as a beginner buyer or seller (everyone is a beginner in this historical market, by the way)! Why? Because the drop is 60 feet in real estate. Nothing like this has ever happened in the history of real estate. The news is not always something you want to hear, or something that is going to make you feel good. Truth actually does hurt sometimes. But it is easier to navigate if it comes from a real estate agent that can tell you how to paddle AROUND that 60 foot drop.

Remember the days when you could offer below list price and wait for the seller to come back with a counter? That’s NOT how it works now. Sellers don’t usually counter. They just drop your offer in the ‘no’ pile and pick up one from the stack of other buyers who are operating in THIS market and offering their best right out of the gate. It’s NOT like the old days, folks. I cannot stress that enough, nor say it enough times. You, Mr and Mrs Buyer, are competing with people who have not even SEEN the house, but are throwing big money at it.

Some would say the answer is to just wait. Well sometimes waiting isn’t an option. Sometimes people HAVE to move. Rent? Have you see rental prices lately?? What this means is that your agent should be able to walk you through…all the way through…the things you will encounter. And you have to listen to your professional, licensed real estate agent. That’s so you can make good decisions having had time to CONTEMPLATE the implications! I don’t like to surprise my clients. I like for them to know what they’re doing, what they will do next week, and what may be coming around the corner. Why? Because that lessens their stress, and you know, if you’ve read any of my blog entries, that a key element of my business is to help my clients have as stress-free a transaction as possible. It’s my job to mitigate stress for you; that’s how I see it. Oh, it’ll never be stress FREE, but stress can be lessened.

Let me just admit that I LOVE electronic signatures, texting, emails…all the things that make info go faster (I used to work in the industry that made this stuff possible). But there are times when a face to face information exchange/Q&A session are crucial. This is one of those times. Sit down with your real estate agent and MAKE SURE he/she understands the market and its conditions. Make sure you’re dealing with a leader. And please, don’t do this and then drop back a decade at offer time and make a low offer, expecting a counter. That will lose the house for you. Every time.

Now…supply and demand. Where are all the houses?? That’s the issue. For every home on the market there are potentially hundreds of buyers. I’m going to estimate the by the time you factor in 1) who can actually get there to see it; 2) who can compete for it; 3) for whom is the timing right; 4) will they be able to do the repairs; 5) is the floor plan right; etc…you’ll end up with at least 10, maybe as many as 20, offers. Sellers are limiting showing time on the market because the showing schedule literally fills up, 8 am until 7 pm, right away. Sellers have to stay away pretty much except nighttime. No seller wants to do that for the long term, and they don’t have too. They’ll get offers in the first 24 hours, some sight-unseen. Yep, that’s the newest little competition. So now, showing options are getting limited and offers are coming without the buyers even laying eyes on the house. This is the market working. This is the environment into which you step in order to sell or buy. You must understand that. This is NOT the old way of doing things, folks.

Make sure your agent can guide you appropriately. That’s paramount. Your agent will share the market conditions with you, tell you where there are lower priced homes, if there are any. Those are usually in the ‘banished from the kingdom’ areas, or they are the ones that say “fixer upper” but really mean ‘dump’. Your agent can tell you how many days homes stay on the market in the area you like, talk about how to make a clean, strong, competitive offer. After you have gotten the lay of the land from your agent, please listen. It’s brutal out there and you actually do need guidance and advice. The internet is a great tool, but the internet doesn’t know my market, and it doesn’t know yours. So find a good…really good…agent.

I’m your girl, by the way. Call me.

Brenda Briggs

Realtor, Broker

Coldwell Banker Advantage

919-210-6113

CHANGE IS IN THE AIR

Pending sales dropped for the second straight month, according to data. One more drop and we can officially call it a trend. But does this surprise ANYBODY? It shouldn’t. I currently have seven buyers…SEVEN…and cannot find anything for any of them, though prices range from $150,000 to $685,000. Data published during the first quarter indicated that our existing home inventory declined by 60% over last year. I think it was higher than that.

I complained loudly last year about investors buying up inventory that would otherwise be there for first time buyers, a trend that effectively pushed that group of buyers firmly out of the market. In a few cases, first time buyers were able to go up in price, but generally not; in other words, the market was squeezed from the bottom by investors. I thought that was incredibly unfair to young people trying to buy a home, because that’s an exciting feeling, taking that step to home ownership, and this group of buyers happens to be one of my favorite.

So, investors pushed people UP in price to where first time buyers were in the $220,000 price point to START, thereby wiping out most young buyers from the market. Because investors gobbled up lower price points, stress was put on the next price plateau until that group of homes was eliminated from the market. That happened very quickly, in part because existing homes sold fast, and people SELLING in that price point often couldn’t move up in price due to lack of inventory. So they stayed, and are staying, put.

All along, us real estate agents were able to funnel clients to new construction to circumvent the dearth of resale homes available. You know the result of that. Builders are now completely overwhelmed with buyers desperate to find housing. Waiting lists are being used and LOT PREMIUMS (once a rare thing) are now the order of the day, and now huge. Lot cost has become an add-on. And buildable lots are being put out for BIDS. So now in new construction, you start out overpricing yourself in the market, just to get a lot to build on. And then you have to be able to afford the house that goes on it. Example: A 2×10 board that used to cost 8 bucks is now 32 bucks. Want to guess how that effects new construction?

There has been a desperate charge by agents to find creative ways to get clients even under contract, and the result has been increasing and increasing due diligence amounts being offered to entice sellers to accept offers. This is a dangerous practice for people without tens of thousands of dollars to risk OR buyers who can just afford to do repairs no matter what. In other words, you had better not expect to walk away if you put up a huge due diligence because that money is at RISK. Period. There are other ways to find homes to buy, and I’m doing all of them. But it’s time consuming and the return on effort is low. It’s there, but low.

I hate to say that I wish interest rates would go up, but as bad as that sounds, it will probably have to happen to stop this insanity. I believe we are about to see the market flooded with short sales and foreclosures because of the Covid effect, which brings back memories of 2008. It’s a scary time out here for those of us who are the boots on the ground, so to speak.

SO…if you are planning to buy OR SELL actually, don’t expect things to happen quickly. Be careful how you handle due diligence. Get someone to help you think it through carefully and KNOW YOUR RISK, on both sides of the table, before you take that leap. My fervent wish is that sellers will stop looking at due diligence as a cash-grab, and help this crazy market un-inflame. We don’t have a ‘hot’ market right now; we have an INSANE market, and an insane market is unpredictable and dangerous. I’ve never seen ANYTHING like it, and I don’t like it AT ALL. I can’t predict the future, but I can tell you that it’s not going to be good in real estate. Not without some ‘rule changes’.

So let’s be careful out there. And, first time buyers? Are you there? I am patient and I will work with you as long as it takes. And as of now, it could be years. But you have to know that under 200 thousand, the homes are statistically nonexistent. That means, one pops up on a rare occasion, but it’s largely uninhabitable.

So while you pour over the internet looking for a house you like and can afford, KEEP SAVING YOUR MONEY. And as for due diligence, just know you’ll have to put about 2% of list price right on the table, up front, to even have a shot at getting a house, but you will get it back at closing. Just don’t walk away.

And call me.

I’m at Coldwell Banker Advantage at Wake Forest NC. Ask for me. Let’s talk.