This is a question I get asked a lot these days. People are worried about a housing crash and they dread the process of finding a home. It is not a fun time to be a buyer for sure!
My response usually is “Today is a better time to be a buyer than tomorrow will be, but it isn’t as good as it was yesterday.” Prices are going up every day between the whole supply/demand thing and inflation. I don’t see an end in sight short of some major economic crisis that creates a lot of unemployment and/or skyrocketing interest rates. (And keep in mind that we DID just have a major unemployment situation in 2020 due to COVID.) Even if either happens, there will be more buyers than sellers since people will simply decide not to move from their current home, which will create an even more out of balance supply/demand situation.
All this is pretty wild compared to 6-7 years ago. Back in 2014 I bought a rental house that had been on the market for more than 6 months. I was the only buyer and I offered much less than the list price and the seller was happy to accept it. I just sold that house for more than twice what I paid for it. Granted I did paint it, put new carpet in the bedrooms and replaced 3-4 windows over all those years.
So, if you are on the fence about entering the market, I say go for it. Sure, you will pay top dollar. You will probably have to bend over backwards to get a seller to even consider your offer. You might lose a few houses along the way. But what is the alternative? Keep renting? With all this inflation we are seeing, your rent is soon going to go up. And it will always keep going up. Meanwhile, the principal and interest part of your mortgage payment will always stay the same. All that can change in your payment is the property taxes and insurance amounts you pay.
It’s finally here. Moving day. Well, almost. It is this weekend. The day I have been looking forward to for the past 5 months. I had no idea something I was so excited about could be so stressful. I spent a lot of time daydreaming about what it is going to be like living in my new home. Now I am daydreaming about what it will be like when my old house is empty. I haven’t moved in 9 years. I had no idea how crazy it is to try to put everything you own in boxes and take it somewhere else.
In case you are just now seeing this, I bought a small home on 15 acres about 20 minutes from my old house. We have spent the past several months renovating the inside. It is going to be a huge change for me and my family. One we are excited about. It has been done for about a week and I have been busy doing several small things like getting appliances in and working on some items from the home inspection. In all reality, I have really wasted a lot of time trying to fix things and leaving them in worse shape than I found them. LOL, this house has reminded me how bad I am at those type of things.
This experience has put me in the shoes of my clients. I’ve had to find a house, buy a house, get through a home inspection, close, pack, schedule movers, get utilities changed, prep my old house to sell and still be a realtor to my clients. This makes me even more empathetic to the stress my clients are going through when they move.
I have always said a house is gonna sell for what it is worth. I said it when it was a Buyer’s Market. I’m saying it now. Overpricing your house is the surest way to make the process take longer and likely sell for less than it could have. Price it right and buyer’s all rush to see it when it is a new listing, regardless of the market conditions. They are afraid of losing the house if they like it. You want that sense of urgency.
Back in a Buyer’s Market, the goal was to drop the listing on the market at the right price and hope to get multiple offers. It is the same today, only with a few tweaks.
Today the list price is more like when an auctioneer begins the auction with a number low enough that they know they will get that first person to raise their hand. Then the price keeps going up until nobody else raises their hand. The list price is more like a suggestion these days. You still do not want to start off with too high of a list price. I often suggest a list price to sellers. They will tell me how strong the market is and want it to be higher. Then when a house sells for more than the list price, they feel like they left money on the table and undersold it. That is not the case. If you had several buyer’s bidding up your house, that means you got every penny out of it.
What I like to do is examine the most recent comparable sales in the neighborhood. I figure out what the house is worth compared to what other buyer’s have recently paid for houses around my listing. Then I put it on for that price since we know 100% that number will work. The worst thing that could happen is you sell it for full price. Then I drop it on the market late on a Friday. That way everybody sees the listing and starts scheduling showings for the weekend. It is good when buyers see other buyers coming and going. It shows them it is a hot listing and they better decide fast. Once I get one offer, I let all other realtors who have shown it know. You don’t tell them before they show it. You wait until after they have shown it so they don’t assume they won’t get it and cancel the showing. Even if the offer sucks and is not one I can suggest my seller accept, just having one enables me to leverage any other offers up as high as any buyer can go.
I recently put on a listing for $360k. We got 6 offers on it. Five had escalation clauses and we ended up selling it for $384k……and that must be the market value since that is what a ready, willing and able buyer agreed to pay. My seller is a good friend who was very happy with the results. If I had put the house on the market for $384k, do you know what would have happened? Since there was only one buyer willing to pay that much, I probably would have only gotten one offer. It would have been full price or less. I wouldn’t have been able to leverage the terms towards the interest of my sellers without the presence of more than one offer any more than an auctioneer could drive up the price with only one bidder in the room.
I really wish it was something like mind reading, predicting the future or the ability to move slow drivers out of the left lane, but it isn’t any of those.
Yesterday, I showed a massive house in Beaumont to a family. Well over 6200 square feet with the unfinished basement. As they asked me questions about the house, part of my answer was explaining what room was above, under, or beside where we were. After a few of these, their oldest son asked if it was part of a realtors job to know the floor plan of every house.
Before that, I had never thought about my ability to walk through a house and build a 3-D floor plan in my head, or visualize what a house will look like from just the floor plan. I just thought everybody could do that?
I used to draw floor plans of houses when I was a kid. Then I took a lot of architectural classes in college. Then I worked as an estimator with a construction company where I would have to build the plan in my head to figure out how much material was needed.
I don’t know what to call this superpower? Any ideas?
A buddy of mine is a realtor in Oklahoma. He posted something on facebook about the market there. Somebody made a comment. He replied to their comment basically saying that a lot of sellers think it is easy to sell their house right now without a realtor, but they need realtors now more than ever to sort through the chaos of getting so many offers.
It got me thinking.
Back when the market was bad and houses were taking forever to sell, I would sometimes have a seller joke that I am making too much money when their house sold immediately.
The public thinks being a realtor is easy money. When it’s a sellers market like it is now, they think they can do the same tasks we do and save the money. But here is the thing, you are really paying a realtor for what they know and to use their knowledge. You are not paying them to just perform tasks. That is why most for sale by owner houses take longer to sell, usually don’t get as many offers, and tend to fall apart more often than those listed by a good realtor……and I will not even get into the quality of pictures that for sale by owner people take, lol.
Even in this market when selling a house is so easy, you need somebody who can tell you which offers are most likely to get to the closing table. There are many variables within an offer besides just the price. Most sellers just think “This buyer is willing to pay the most so let’s go with that one!“