The Skinny on the Real Estate Market
The current real estate market we are operating within is interesting. If you have any friends that are currently looking to purchase a home, or have recently attempted to purchase a home, you will have no doubt heard about their travails and efforts. They go something similar to the following:
We looked at 35 or more homes and made offers on 5 of them. We were beaten out on the first four by folks paying stupid amounts of money for a home or who were willing to skip an appraisal or home inspection (sometimes both!). We found a home, finally, where our offer got to the table before anyone else (or, we were finally willing to change our purchase agreement to become more attractive.)
For your friends that are selling or have sold their home, their story is likely a little different. It goes like this:
Ok, that’s sort of an exaggeration. No one really uses that many exclamation points. 🙂
The Fat of the Land
While working with buyers right now can be a supreme challenge, huge opportunity exists on either side of the real estate transaction. Right now, communication with real estate buyers needs to be laser focused, with a ton of sympathy. After all, does anyone like working with an unsympathetic sales person?
Oh well, there’s always the next home. But don’t worry, I’ve got other clients. I mean… there will be another home for you to attempt to purchase.
Those might not be the words used, but those are the sentiments that buyer clients certainly perceive. Buyer’s agents that are able to keep up with the myriad of questions and the seemingly unending requests to check on the status of off MLS listings, will continue to show their value to their buyer clients. Especially if agents are able to be consistent in communicating care and concern for their buyers in this tight market.
On the selling side, the opportunity is much easier to grasp in this market. Often times, it looks too easy to sell a home. It can appear that the only thing we do as an agent is list the home on the MLS, wave our hands about a bit, and buyers come stumbling out of the ether with purchase agreements. However, this market, favoring the sellers, will not last forever. The market will turn, at some point.
Fair? I don’t see any merry-go-round here…
Recently, as a buyer’s agent, I was the unpleasant recipient of, in my opinion, a mis-managed hot property, with multiple offers. We were first through the door, and first to the table with an offer. Our offer was full price, 20% down, and typical contingencies for our market. After receiving the offer, we were told that to secure the transaction immediately, our offer should be [higher sales price]. I chuckled and asked just how many offers we were competing against at this point in time. I was told that we were the only offer, but that there were another 24 showings scheduled and that they anticipated multiple offers. Not wanting to negotiate against myself, I kindly asked that we be notified when the second offer appeared, and in the interim, circled back to my buyers to craft a highest and best offer.
When the “myriad” of other offers materialized, there was no clear deadline to the acceptance of offers. The agent, or seller, was unwilling to cease showings and put a hard date and time to when offers needed to be submitted. What ensued was an ever increasing number of offers and sales price. We had written an escalation clause into our purchase agreement. Every hour or so, I was kept abreast of what our new sales price would be. As you may have guessed, we did not win out on the bidding war.
The frustrating bit, for my buyers, was that we did everything swiftly and correctly, and still got beaten on the bidding for that home. This is not to say that the other buyer’s agents did things any differently, albeit slower, than us. It set a distinct impression, in the minds of my buyers, that even when operating with best practices, there was no guarantee of even a timely response, let alone the reply we desired.
Flip the Tables
A practice that I have adopted over the last year and a half has been to control the myriad of showings and offers, as best as possible, on behalf of my sellers. The short story is that I will put a property on the active market on Wednesday, with all of its spectacular marketing, and begin showings at the open house on the next Sunday. Typically, I wind up at my seller’s kitchen table on Monday evening, with a multitude of offers for them to consider.
With the razor thin inventory levels, and steady to rising buyer demand, I do not play the “highest and best” game, after receiving multiple offers. Agents are notified of an offer deadline and, upon offer submission, that I have multiple offers. Further, they are notified the sellers will not be playing “highest and best” and that the decision will likely be wrapped up by 12 noon on Tuesday.
For my sellers, this solves a few concerns. First, sellers in my marketplace have heard how rapid property can move. They know that this likely entails a non-stop stream of folks through their home. By beginning the showings at the open house, my sellers are only booted from their home for that afternoon. Sometimes there are some straggling showings after the open house or early on Monday, but for the most part, a two-hour open house on Sunday afternoon has done the job.
Second, by setting clear guidelines for buyers (when the offers are due, that we have multiple offers, and an estimated time for a decision), sellers anticipate that the process will move along quickly. The expectations are that we will come to a rapid decision and begin the quick march towards closing.
For the buyers, this process offers up a clear timeline and sets the expectations accordingly. As a consumer, let alone agent, there is nothing worse than not knowing when you can expect a reply to the offer you’ve written. Knowing that the buyer will get a reply, and roughly when the reply will be coming, affords them the expectation of when they will know if they are either buying a house or continuing to look. Not knowing when a reply comes just sucks the wind out of many a buyer’s sails.