Predicting the Market

Holidays.  You love them, you dread them, you never know what you’re gonna get.  It’s like that in real estate markets, too.  I can predict with some level of accuracy what the market will look like in the last quarter and into the first quarter…from the 10,000 foot view.  I normally have a Thanksgiving and a Christmas closing…not ON those days, but close.  And I usually have closing or two in January.  Some real estate agents will say that people don’t buy houses during holiday season. Well, my clients do. Usually.  But I’m neither a mind reader nor a market psychic.  You just can’t predict accurately all the time.

This year I have multiple deals in the works for year end, more than ever, in fact.  So I figure that my normally SLOW months of February and March might be flat.  But then again… mayyyyybe not.  I have some pipeline business that will likely take me into the first quarter at a reasonable clip.  Could all of the buyers decide not to buy?  Yep.  They could.  Can’t predict.

What I’m trying to say here is that nobody can predict buyer behavior.  Right now, my listings have gone quiet, suddenly and inexplicably, which means buyers are ‘on a break’.  I blame it on Halloween, which is apparently a much bigger holiday than I gave it credit for being.  I don’t get it, but if I don’t blame crickets chirping on Halloween, I have to go to the spacecraft sprinkling anti-home shopping dust on the area, and frankly, I like the space ship idea even better.

It’s funny how this stuff works.  People can be maypole dancing around listings in the entire area, and then suddenly…crickets chirping.  So, if you have your home on the market, just know that these things happen, they come up and they go away.  And your home will sell.  Can I tell you when?

Nope. Wish I could.

Contingency Offers: Get with the Program!

The need for sellers to accept contingency offers is quickly becoming a frustrating issue in the Triangle. Because sellers usually need to find a home to buy, and because of the growing shortage of houses for them TO buy, we’re facing a new, huge challenge. Buyers know how hard it is to find a home to buy in general, but SELLERS cannot compete with buyers who do not have a contingency, once their home is under contract. But think about this: If sellers know they have a double challenge (selling their home and finding one to move to) AND they know agents will not advocate for them in presenting (and getting accepted) contingency offers, then we can expect a big drop in listings. There you have it: My prediction. With the existing shortage of housing, if people stop listing, we’re in for a terrible situation. Agents need to become familiar with contingency offers and stop viewing them as bad. If a seller needs to make a contingency offer in order to have a shot at a place to move TO when they sell, then this puts the owner of the DESIRED home in an even stronger selling position. They can ask for full list price, high due diligence, and pretty much anything else they want, just for accepting a contingency offer. They might have to make one more house payment than planned, but they can also get that payment in due diligence if they play their cards right. Contingency offers are not the devil and they are growing…GROWING…in popularity and need. But both agents need to be able to have a frank discussion about the likelihood of two successful transactions and work towards facilitating a win-win situation. I remember writing blog entries, appealing to buyers to be sensible about their position of power during the market crash. So many buyers lost perspective and put sellers in heart wrenching positions because they had the upper hand. I hope our sellers now, when it’s their turn to hold all the cards, will keep their perspective as well. And agents, think about these contingency offers. They may work to your sellers’ advantage, if you negotiate well.

Interest Rates on the Rise, BUT…

It should come as no surprise that interest rates are on the rise.  This means that a house payment you could afford six months ago might be out of your range now.  It’s still a great time to buy a home, though, because rates are still at record lows.  I’ve had some conversations lately that made me remember that the interest rate when I bought my first home was around 17%.  I know.

My professional advice is to visit your preferred lender IN PERSON, and have a conversation about the different kinds of loans out there, and get several estimates, based on increasing rates.  Understand that there are MANY different types of loans, including, yes, adjustable rate ones.  My first mortgage was an adjustable rate loan, but my rate was frozen for four years, and could only adjust upward one percent per adjustment period afterward.  Good.  At that time rates were SURE to go down anyway, but before the adjustment, I refinanced to a conventional loan with a fixed rate.  And just so you know, there were a plethora of adjustable rate choices at that time.  I’ve used a balloon loan too.  Low fixed rate up front for a period, after which the entire amount comes due.  But you just FINANCE that amount, and the risk, of course, is what the rates will be at that time.  In my cases, they always went down, which was a calculate risk on my part.

If you’re not comfortable with risk, then these adjustable rates or balloon loans are not for you.  But the point is that there are other ways to calculate your payment than just a straight, 30 year, conventional loan.  So take a couple of hours and visit a loan officer.  You’ll be amazed at what’s out there.

Adjustable rate mortgages got a bad reputation in the aftermath of the real estate market crash…which should be called the Wall Street Greed crash…because lenders were writing loans that never should have seen the light of day and would land somebody in jail today.  Note that they did that, often, at the behest of Wall Street brokers who needed sub-prime loans to fill tranches blah blah blah.   HOWEVER…not all adjustables are bad.  If you are responsible and do your homework, an adjustable rate mortgage can be a way to beat the rising rates for the short term.  But you will need to be in a good financial position to refinance when the time comes.

Bottom line is this:  In our market here in the Triangle, every seller expects a loan approval letter (some a pre qualification letter) to accompany your offer to purchase, otherwise your offer might be rejected immediately.  So you’ve had to have at least one conversation with a lender in order to get that.  Make it a meaningful conversation, a deep dive into your options…all of them…so that you get the most bang for your hard earned bucks.  In other words, don’t let rising rates put you out your dream of buying a home.  There are GOOD ways for responsible buyers to nab a low rate.

Wanted: Experienced Realtors…

Just like other areas of life, there was a recent push to replace experienced real estate agents with “millennials”.  The thinking was that millions of home buyers would be people in this age cohort, that they would be THE buyers and that they would want to work with agents who were their peers.  Well that wasn’t on target, to put it mildly.  Many of the younger buyers are renting and paying off college loans, or even staying at home with Mom and Dad…not buying.  Real estate planners shouldn’t feel bad; retail made that mistake too.  Many of the millennials are educated, savvy, street smart and skeptical about anybody wanting their sparse cash.  They want details, they want to know their agent has a solid knowledge of the market and is well capable of walking them through the jungle of tasks associated with buying and selling a home.  In other words, millennials expect to be leaders and as such, their real estate agent had better be qualified to take that lead.

Millennials who do buy are not usually in the higher end market; rather, they are usually in the first time buyer and first time move-up buyer price range.  They, and other who ARE buying in the high end market do not want a “millennial” guiding the transaction.  Well, I’m a 10,000 foot view person.  I saw this stumble coming a mile and a half away.  Don’t get me wrong; I love young people.  The ones I get to meet and work with are very smart, very motivated and very sensible about buying.  They give  me hope for the future.  But young real estate agents are not well rounded, confident and knowledgable about the market just yet.  They deserve to grow and build a skill base, yes; but that doesn’t negate the value of experience.

So some of the same companies who were nudging the older agents aside are now actively recruiting experience.  It’s a shame that experienced agents are often overlooked by the ‘planners’ of the future of area market movement, and that that experienced agents are re-noticed only when the cavalry is needed.  But that’s how it goes.

My advice to you is this: Realize that you are making one of the largest transactions of your life, and that you should put that transaction in the hands of experience and knowledge.  That doesn’t mean someone who made a high score on the test, although that’s important.  It means someone who understands the nuances of the market beyond what the publications say.  It means someone who understands that prices in neighboring communities can be very different and why.  It means someone who has experience with inspectors and builders.  It means someone who knows how to spot hidden potential issues.  It means someone who knows what’s worth worrying about and what is not.  It means knowing the importance of pricing and how it impacts the overall market.  It means knowing how to put the most cash in your pocket at the end of the day.

I decided to write about this subject today because I have been working on a market analysis for the last several days, in a new growth-spurt area, where prices have jumped significantly in the last year.  I want to push my list price as high as I can…and be able to have it appraise at that value when the time comes.  This of course prompted a deep dive into that area and into that community, and a subsequent spreadsheet…mine, not a canned product.

One of the values I use, LOOSELY, I might add, is price per square foot.  And while this is the WRONG WRONG WRONG value to use in pricing a home, it does give you a nice snapshot of market activity at-a-glance, and it can be quite eye opening.  It was for me.  In my area of interest there were 3 of 14 homes I studied, which had VERY much lower sold price-per-square-foot.  This prompted me to look at the listing agency AND agent, and each case, the agent was inexperienced.  This costed the home owners/sellers a lot of money they could have made on their transactions and it hurt the overall market.  These low-ball prices will be put into the “comp” pot, and will be used by appraisers in pricing other homes for mortgages.  And this tells me nobody’s guiding these agents appropriately and nobody has told them the value of strong pricing.  Nobody has shared with them that listing with strong prices raises the entire market, which is actually our job…to protect the market.

So, while other home sold in the 118.00 price per square foot, these homes sold at around 108.  That adds up.  To loss for the sellers.  The moral of the story is this: If you hire inexperience, it will cost you.  You may never know it…which would be the best scenario.  If you do know it, you have to wonder where else you got short-changed.

I need to also say that sometimes it pays to price low if a quick sale is needed…for the SELLER, not the agent.  And that’s all I will say about that.

Bottom line: Be sure your agent is experienced enough to be a strong, successful advocate for you.  That’s what you are paying for.  This isn’t an opportunity to be trendy; this is your money at stake.  Experienced agents will understand that.

 

MARKET STRATEGY FOR THE TRIANGLE

If I said it’s a crazy market would you think I’m repeating myself?  Well, it’s a crazy market.  There’s a housing shortage folks, which makes it the strongest seller market I have experienced.  For the first time in my experience, all of my buyer clients (and one seller) are BUILDING their next home.  That’s because…duh…there’s as housing shortage, and people can’t find a home they want to buy!  If they find one, there are five offers on the table already! ALERT!  TIME TO LIST IF YOU ARE THINKING OF SELLING!!  I’ve said that so much I’m out of breath.  Again, you can make the MOST on the sale of your home now, while there are people clamoring for a great home to buy and who don’t want to wait six months to build!

Remember when I said I couldn’t wait until the pendulum swung back to center?  When I was tired of my sellers getting the pants beaten off of them?  Well, I’m glad alright.  Sellers are now in control.  Like I said, the universe WILL balance.  Never fails.

But like always, there’s a “but”.

I find that many real estate agents negate the power of supply-and-demand when pricing homes to list.  For example…one-level living is the hottest thing going right now, except for senior living communities…which are also one-level living.  So if you have a ranch style home, you are in the proverbial cat-bird seat.  Now that only applies if you home is marketable.  I’ll explain later.

Back to pricing:  Yes, look at the price range of homes in your zip code and focus on your comps.  Then search for ranch style homes in the MLS AREA, and see how many ranches are out there.  If you find ONE or NONE?  Instant benefit to you, Seller.  You may now price at the high end of the range and expect to get it.  I recently had an agent lambast me in her feedback telling me that my listing was priced TWENTY THOUSAND too high. Well, we sold that house for the price I set.  Booyah!  Pricing is my strong suit folks.  I get it done.  If she had listed the house, well, not a happy face on that one.  And it would have hurt the market for the community too.

When you meet with me, I will ask you this, “What is your selling goal?”  Now that might sound stupid, but bear with me.  If your goal is to get rid of the house FAST, that initiates a different STRATEGY for pricing your home.  In other words, we might aim a bit lower in price, or come up with some enticing concessions.  But if your goal is to get every last penny the market will allow for your property, well that’s another STRATEGY, and its my favorite.  That means we price you at the high end of your range, but we expect to MAYBE take a bit longer to sell.  I don’t know about you, but I’d wait two or three more weeks to net 5 grand.  If you are not in a rush, relax and focus on your bottom line getting BETTER.

If your agent doesn’t talk strategy with you…ask why! There is more to pricing your home than pulling up some comps and taking an average!  Supply and demand MUST be considered!  If you have the only ranch style home with an acre or more lot in the whole area?  You just hit the jackpot on pricing; I don’t care what the other homes went for.

Understand that pricing your home is a many-faceted operation that takes time, it takes knowledge of the greater market, your LOCAL market…which sometimes means your exact community…and it takes an understanding of what you, the seller, want to achieve.

My goal in any listing situation is to get you, the seller, every penny I can get for you on pricing.  But if you just need to move on, we can change that strategy.  It’s a team effort and your agent MUST know your needs, not just how to average the sale price of three properties sold in the last three months.

Now, back to having your home “marketable”…People sometimes hate to hear this, but here is the cold, hard truth.  If you want TOP DOLLAR for your home, it MUST be in top dollar CONDITION.  That means you have to roll up your sleeves and do some cleaning and re-arrange or maybe even remove some pieces of furniture.  Remember we look at houses ALL THE TIME.  We know what sells and what doesn’t.  You HAVE TO DECLUTTER.

Buyers are buying space, not your decor.  Don’t fault the professional real estate agent when she tells you what you have to do to get top dollar.  Is your decor worth ten thousand dollars to your bottom line?  I’ve seen people say yes to that time after time!  Amazing!   I don’t have that kind of money to spare, how about you?  If you do, don’t worry about making your home “marketable”.

So…remember that if you want top dollar, the house must be WORTHY of it. If you are not willing to put in the sweat equity to get top dollar, do NOT blame your real estate agent! Instead, look in the mirror.  Remember that selling your home is a team effort and you…let me repeat…YOU are one half of the team.  So get involved, know your strategy, and get that home spiffed up to garner the best price!  If I’m your agent, I’m going to work very closely with you to get you that price.

Let me just add one more thing: Don’t start getting antsy.  If you have chosen a savvy real estate agent who has clearly understood your needs and laid out a great pricing strategy, listen to her and settle down.  Selling a home is nerve wracking I know, but you will shorten your life by pacing around being nervous.  Relax and let the strategy work.  You can count your money and your blessings later, trust me. And if you can’t trust your agent, you’ve got the wrong agent.  Just sayin’.

The Latest Crazy Market Paradigm

Hi everyone!  Hope this post finds you well and I hope you’re planning on either buying or selling your home AND calling me first.  It’s a huge market out there and with an interest rate hike looming, it’s likely to get bigger, faster, busier. Crazier is probably a better word.

We’ve talked about how you can’t even get the offer on the table for consideration before the home goes under contract and now homes are selling BEFORE they hit the market.  Multiple offers have become the norm and it is a STRONG seller market.  Home prices are rising and builders are busy again.  Good to see.  But there’s something new and again, we need to be careful about this.

Sellers are demanding shorter due diligence periods in a market where getting immediate inspection services…for home, septic, well, HVAC, pests, roof…is impossible.  In some cases there’s a two week lead time to get someone out to inspect, and some sellers are asking for a three week due diligence period.  Impossible.  What this does is put undue pressure on buyers who are already incredibly busy getting loan approval and meeting all of their obligations as buyers.  Ultimately, it’s not good for the seller either; they end up with days to get repairs done, rather than weeks, so the stress boomerangs right back on them.

It’s hard to get through the due diligence period, followed by an even more difficult repair negotiation.  Let’s not be stupid about this.  Nobody’s losing anything if the home is under contract with a financially strong buyer and the home is well maintained.  Relax and give the buyers a chance to do their due diligence!  Agents, remember when you agree to this short due diligence period, you could very well be asking for an extension and your buyer might have to fork over more due diligence money.  The seller has a right to ask for it.

Shrinking Inventory in the Real Estate World

The Perfect Storm is looming.  Interest rates are creeping up; housing inventory is shrinking; people are rushing to buy, people who were on the fence for some time.  It’s turning into a seller market, for these reasons and one other one that’s HUGE.  Multiple offers are commonplace.  Great for sellers.  Not good for buyers who are used to insisting on paint color being perfect before they even buy, carpet being new in a ten year old house, the right smell, the right temperature.  Sellers, celebrate.  Buyers, take a deep breath.  The world we knew a year ago has flipped.

When sellers have multiple offers on a home you really love, suddenly their repair budget shrinks or yes, even disappears altogether.  Some offers are high with ZERO concessions.  Suddenly that decor isn’t so bad after all, suddenly sellers are smack dab in the middle of the driver’s seat.  And folks, as inventory continues to go away, it’s going to become even more dramatic.

For so long sellers were put through the wringer trying to sell, and now it’s about to swing strongly in the other direction, moving so quickly through the middle ground we’re likely to miss it.  If you’re a seller, it’s a great time to have your home listed.  Buyers, better get busy, because not only might you have to compete with several others to get the home you love, you’re going to pay a lot more each month as interest rates creep up.

I said, some time ago, that one truism is that the universe WILL balance.  It happens in all areas of life, and it’s happening in real estate now. Don’t you feel it?  Exciting times.  Don’t miss out on the still good prices and interest rates, people.  We’re about to see house prices, first on new construction, take a big leap.

Call me and let’s get busy!

Real Estate Referral Letter

There is no higher compliment in my business than referrals from past clients. Not only does it help create a firm foundation for your business, but it just plain makes you feel good.  Here’s one that made my day:

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Recommendation for Brenda Briggs

Selecting the right realtor can be a daunting task, as there are so many agencies and qualified individuals available in today’s marketplace.  After interviewing several, we chose Brenda as she was ‘down-to-earth’, easy to talk to, and very professional in her approach.  She more than exceeded our expectations!

Rather than feeling like just clients of hers, we felt “special”.  We knew that she was doing her utmost to find a buyer for our property.  She answered our calls and emails promptly, listened to all of our concerns, offered valuable advice, and made the whole process of selling our house run smoothly.  If she felt a room needed a special something, she addressed the situation herself, rather than asking us to do so.  She instinctively knew what needed to be done to make the house sell, and she succeeded in short order in a slow moving market.

Brenda excels at negotiations, and has perfected the art of dealing with buyers and sellers.  She possesses just the right touch when anxiety flares on either side, remains professional in all aspects of the transaction from the signing of the listing agreement to the closing, along with demonstrating integrity in her business relationships.  We always knew that she was there for us, representing our best interests at all times.

We appreciate all the extra work that Brenda Briggs did to make the sale of our property a reality.  We cannot recommend her high enough!

Jaine and Brian Parry

And by the way…these people are special to me.  I never knew them before I listed their home, but they are now a part of my history…and hopefully my future as well.