Is it time?

I’ve been saying for several years that people don’t have much of a reason to move.

Yeah, everybody knows they can sell their house fast but where would they go?  Everybody knows their house is worth a lot more than it was a few years ago but so is the house they’d want to buy.   And then there are the interest rates.  It is sort of hard to think about giving up your 3.25-3.75% rate and signing off on a new loan at 4.25-4.5%….even though I remember bragging about my 6.5% rate on my first house when all my friends were paying 7.25%.

Rates are back under 4% now.

I am thinking that we might start seeing more houses come on the market as people move on to bigger and better things.  If there is one thing I know about real estate in America, it is that we all love to move to a bigger and/or better home.  I mean, as soon as the economy picked up after the Great Recession, we flipped from a Buyer’s Market to a Seller’s Market overnight as people felt comfortable to buy the home they had been wanting for a while.

If that happens in the next few months, the headlines will read that it is a seller’s market fueled by the threat of a recession, but you and I will know the real reason.  It’s the rates.

What is market value?

Pretty simple.  It is what a ready, willing and able buyer is willing to pay.

READY.

WILLING.

ABLE.

It has to be all 3.  Not 1 out of 3, not 2 out of 3.  All 3.

Too many times when I have gone to list a house, a seller tells me how they have or had an offer from somebody they know or a friend of a friend that is waaaaay over what the house is worth.

I start asking questions.  Most of them end with replies like:

“They had to sell their old house first.”

“They had to get preapproved.”

“They have to wait to file their tax returns.”

“They haven’t returned my call from last week yet…..”

It always breaks my heart to tell these sellers that their Buyer is not ready, is not willing, and is not able to buy their house.  These people are not buyers.  I call them Dreamers.  It is easy to make a high offer if you’re never going to buy the place.

Another thing on market value.  It’s what most ready, willing and able buyers will pay.  Out of 100 buyers, probably something like 98 will all think a property is worth the same.  Those last two buyers are the oddballs.  There is always one person who thinks eveeeeeeeeeerything is overpriced.  And then there is that one buyer who will pay too much.  This of course is the one ever seller wants, but in 14 and a half years of being a realtor, I have only come across a few of these buyers.  LOL, they are usually the ones who go way over the list price or make a full price offer on an overpriced listing…..making me look bad to my client.

A house I was going to flip is a perfect example of this.  I put this place on the market for, I think, something like $138,500 because that was what the recent sales showed.  I got 7 offers.  One was for $122k.  One was for $143k.  The others were a little over the list price because there was nothing for sale in that price range at the time and they all knew there were other offers.  The 5 offers were all within $500 apart.  That was probably market value since 5 buyers independently came up with pretty much the same value.

 

How the market really works

Let’s say there are 10 houses for sale and 10 buyers, which would be a balanced market.

What happens with the #1 house?  It gets multiple offers and sells immediately.

What happens to the #2 house?  It is now thrust in the #1 position and gets multiple offers and sells.

Why does all this happen?  Because everybody wants the nicest house they can get.

This process continues down the line UNLESS new listings come on the market.  You can have the #1 house sell and the #2 house still be the second best one IF a fantastic new listing hits the market and assumes the #1 spot.

What about that #10 house?  Unless there are far more buyers than sellers, the #10 house will sit there for a longtime.  Every buyer has seen it and decided to wait for a better house to hit the market.  Sometimes this #10 house can become something like a #2 or #3 house with a price reduction.  Price is everything in real estate.

I’ll put this into some real world things you may have seen.

A house you have been following has been on the market for a while.  Every other house in it’s price range sold the first day on the market.  You wonder why it hasn’t sold.  Then all the sudden it gets multiple offers.  That is because the houses that were better have sold and now it is the best available house in its price range.

A house you have been following has sat on the market all summer and fall.  It’s a house nobody wanted.  Much to your surprise, it sells in January.   This happened because there are far fewer new listing that time of year and now this house appears to be one of the best.   If this house doesn’t sell in the winter, it will sit on the market during the spring/summer/fall again because there will always be a new listing that is better.

The market is all relative to what else is available and it changes daily.  As a seller, you want to get your house to be one of the best ones available in it’s price range.

What did I do for Father’s Day?

Like most days in real estate, I woke up thinking “Wow, I only have a few things to do today!”  Then also like most days, by late morning my day got very busy.  I’ve always thought of being a realtor like being a fireman.  We both rush into houses, only for different reasons.  We also both can have the course of our days changed by a phone call.

My plan was to show 2 houses and then go see my dad.

One of those houses sold, and my client added another one, so there was still two to show.

The second house was a loser.  I didn’t even go upstairs.  I knew it was a loser as soon as I stepped out of my car.  The buyers realized it too as soon as they stepped inside.

The first house I showed them was totally amazing.  Great lot.  Great floor plan.  In good shape.  It was one of those houses that any buyer who sees it will want.

Which happened.

So, now my plan was to write an offer for my people on this house and then go see my dad.

Like most days in real estate, it took a sudden change when the listing agent told me that there was another offer.  I put on my persuasive hat and went to work.

My buyers had a contingency to close on their old house, which is not a great position to be in these days.

The buyers and I spoke about how to make our offer more competitive.  We decided to double the normal amount of earnest money and to waive a home inspection.  The house is 6 years old and the sellers had bought it just 3 years ago.  It also has a brand new roof.  No need to negotiate the minor list of repairs that happen with every house when waiving it makes such a big impact.

The seller was in the Marines and the grandfather of one of my buyers was in a well known Marine picture.  I told the listing agent I would get the seller an autographed picture if he wanted one.  I also told her to pass on to the sellers how my buyers have been wanting to get to this area for several years so they could be closer to aging parents, but a cancer scare prevented them from moving until now.  I also mentioned that one of my buyers was a teacher as well.

The sellers decided they wanted to work with us despite the other offer not only being a higher price, but also that buyer did not have a contingency.

By now it is late in the afternoon.  I broke free to go see my dad.  I always get him a big gift card for Frisch’s.  He has been going to a breakfast there with his BMW motorcycle club since the early 80s.  I used to wake up early when I was a kid and go with him.  I’m way too lazy these days to be anywhere other than in my own bed at 7:AM, but paying for his breakfasts make me feel like I am still a part of it, and makes me remember riding on the back of a green motorcycle, which he still has, to go hang out with him.

Zillow, PLEASE stop doing this

Okay Zillow.  I can deal with you saying every house has a carport.  I can deal with your inaccurate Zestimates.  I can deal with you often messing up school districts.

What I can’t deal with though are the Pre-Foreclosure listings.

Why?  Because they ARE NOT FOR SALE!

Zillow, people see a house on your site and think it is for sale.  Why do you confuse the public and leave it to us agents to explain to our clients that the house you just posted is not for sale?

Here is what is going on with those Pre-Foreclosure listings.  The person who owns the house is far enough behind on their mortgage payments that the lender has filed a lawsuit.  As soon as that happens, Zillow posts it as a Pre-Foreclosure.  Since the person who owns the house is not the bank, you cannot go see it since it has not been foreclosed yet.

If the lawsuit goes the way the lender wants, the house will eventually be sold at the Master Commissioner’s sale.  The Master Commissioner is who is appointed by the court to sell the house.  Anybody with 10% down and proof of the remaining funds can go bid on the house.  You have to have the funds available.  You can’t go down there with 10% down and a preapproval letter for a mortgage.  You have to show proof that you have the balance of the money available.  You also can’t see the house.  You have to buy it without any type of inspection contingency.

There are two types of buyers at the Master Commissioner sale:  Investors and the Lender for the house.  Sometimes investors get the house.  Most of the time the lender buys the house.  Well, we call it a sale but in all reality what is happening is the money the lender pays for the house goes to settle the debt the seller owed them so they are getting it right back.  Picture a dollar getting pulled out of your left pocket and going into your right pocket.

If an investor buys it, most of them either flip it or rent it.  If the lender buys it, it eventually goes on the market for sale.  This time when you see it on Zillow, it will really be for sale….and it will probably say it has a carport.  And the Zestimate will be inaccurate.