What’s a Buyer to do in this evolving crazy market?

When the market started heating up, the smart buyer’s agent knew to get an offer in ASAP to try to beat other agents to the punch.

Then we all started doing something like saying “Reviewing offers on such and such date and time.” That was nice because you knew that you had time to show the house. If your client couldn’t break away to see it immediately, you could tell them you could do the next day.

Now it has evolved to the point where we are saying “Reviewing offers on such and such date but the seller reserves the right to accept any offer at any time.” So we are back to dropping everything and rushing out to see a new listing ASAP.

What is a poor buyer to do right now to get a house? Make such a strong offer that the seller will want to accept it immediately. Turn the tables and make the Seller chase you! That usually involves 4 big things: Price, inspection, closing date and possession date.

Obviously for price, that means a stupid high number. I can’t believe after spending so many years blogging about not overpaying in a Buyer’s Market, that I am now suggesting people do this. But in this market, it is the difference between getting a home and not getting a home. Instead of “Go big or go home”, it is “Go big to GET a home.”

Inspection…..waive it totally if you can let yourself do it. Having dealt with probably close to 1000 inspections over the past 16 years, I can tell you that I rarely see a house with a deal breaking problem. Most of the issues that would make you want to walk away from the house are typically visible if you look. If it has old HVAC units, well, you know you will have to eventually replace them. Roof have a shingle blown up or need some flashing around a chimney? That’s not worth losing a house over. Plus, most of the time all you can get a seller to do these days is spend $1000 or so on repairs. Most of the items found on a home inspection will probably also be found where you are living now: Some electrical oddities like reversed polarity or an ungrounded outlet in older homes. Various plumbing leaks. A roof, HVAC units or water heater somewhere between new and needing replaced. Most of what is found on a home inspection is deferred maintenance.

A lot of sellers have already bought another home and know when they will be closing on it. Ask their agent what the ideal closing date would be for the sellers. If you can make it work, you have just made your offer much more appealing to them.

Same with the possession date. It’s a pain in the rear to have to be out of your old place the same day you get in your new place. If the house was in reasonably clean shape when you saw it and you don’t think the sellers are terrible people, ask if they need a couple of days to stay in the house after the closing. Some breathing room is always nice. The worst I have seen when this happens is that you often get left some garbage or a dirty house. Most sellers are eager to get to their new place so you don’t really have to worry about them not moving out.

All of these things are a little risky to a buyer. I know. I get it. But the people that do these things are the ones who are going to be moving into that house you fell in love with and were outbid on.

A good realtor is like using the Waze App

I’ve seen a few sellers lately make some bad decisions.

I get it. Selling your home is something you only do so often and I don’t expect them to understand the market and all the obstacles between sticking the sign in the yard and the closing. All they know is that the market is hot and selling your house is easy.

What they don’t know is that keeping it sold can sometimes be a lot of work.

I recently had a friend decide to list with some less experienced agent who was going to reduce the commission. I was going to reduce my commission to ZERO since this person was a friend and they had some circumstances that required them to move, guess I should have told them that sooner. I had been giving advice and working towards getting this done for close to a year. To this seller, all they were thinking about was saving money. Well, you only realize that savings when you close the sale. The house sold and is back on the market. Usually when a house comes back on the market, it doesn’t get the same attention from buyers. Most buyers in the market have already seen it and either said no to the house or made an offer that obviously wasn’t the best one or they would have gotten it the first time. This is where experience is worth every penny, even though I wasn’t planning on getting any pennies from this sale.

I am currently working hard to keep a deal together for a house where the buyer went to do the final walk through before the closing and found the ice maker had been leaking and has caused $12k in damage to the house. I know if my listing goes back on the market, we will never again catch such a fantastically qualified buyer who was the highest bidder, so I better put on my thinking cap and get this done.

These are just a couple of current examples of where experience can make or break a sale. The goal is to get to the closing. I am thinking about the entire process, not just the beginning. Not just the next step.

As I was making my second cup of coffee and thinking about writing this post, it reminded me of the early days of GPS. You’d enter the destination and take off. I think that is how most sellers view this process…….”I’ve got a realtor and they just stuck a sign in the yard. It’s all downhill from here!” If nothing goes wrong, then that is very true. But how often have you had your GPS take a crazy route or not know about construction, wrecks or other annoying delays? It’s the same with real estate. A lot of inexperienced agents don’t know what to lookout for along the way or don’t know how to negotiate. Sometimes you have to take an alternate route. Sometimes you need to change lanes along the way. A good realtor is more like the Waze app……not only are we watching out for delays, we are looking for speed traps and doing it all in real time as we get you to the final destination, which is the closing.

The market is crazy but being a realtor isn’t

Everybody knows how crazy the real estate market is right now. Everybody I meet wants to talk about it. Everybody assumes every realtor is crazy busy right now. We are not. The reason is because you need houses to be on the market in order to sell one.

It’s super easy being the listing realtor right now. You put a house on the market and have a busy couple of days getting offers, then it is over. Being a buyer’s agent these days is a lot about waiting for a house to come on the market, then rushing out to see it. I used to show houses 3 nights a week and all day long every weekend when it was a Buyer’s market. I think the last house I showed was mid last week. Back then, people would look at 20-30 houses before making a decision. Today a lot of people are viewing 3-4 houses and picking one. I have sold many where the buyer bought the first house they saw. I’ve got plenty of buyers. Some of them are looking for a very specific home in a specific school district or neighborhood. I have worked with one of them for about a year and only shown them 6-7 houses. That’s because so few houses have hit the market in their price range and in the neighborhoods that will work for them.

So being a realtor right now is a lot of waiting. Waiting for sellers to get their homes ready to list. Waiting for the right house for your buyer…….waiting for something interesting to happen so you can blog about it.

How to price your house in this crazy market

Everybody knows that it is the craziest seller’s market ever.

Everybody knows houses are selling for over the list price.

What a seller does with this information is often all wrong. Sellers think they need to price their house as high as they can to get the most out of it. That is totally wrong today.

Today the list price is really just an opener, similar to an auction. Imagine if you went to an auction and the auctioneer began with the number that would be the same as the sale price at the end of the auction? How many bidders would you have? Maybe one? Maybe none? This is effectively what a seller does when they start too high.

I showed a house a few days ago that was listed for $185k, which is pretty high for what it was. There was a line of people waiting to get in to see it. This morning I got an email from the listing agent that they had “An” offer. A few days on the market and they get one offer from all those showings. Had they started at something more reasonable like $175k, they might have ended up at $185k or more. Why? Because buyers are used to going over the asking price these days. When you start at the number they would be willing to pay, they assume they would need to go over that to get the house and are not willing to do so. To a buyer, a list price of $185k means expect to pay $190-195k or more.

The best strategy today is to price the house in line with the most recent comps and create a multiple offer situation. The only way to take advantage of the buyer frenzy is to have two or more people trying to outbid each other for your house. Pricing it high and only having one buyer would be just like going to an auction where there is only one bidder in the room. This is why the success of an auction depends on having maximum exposure for a brief period and then setting a deadline for the sale.

Is it a good time to buy?

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.