| The local real estate market is shifting a bit beneath our feet. We’re still in one of the hottest markets in the country, tilted very much in favor of sellers, but some subtle changes are afoot and both buyers and sellers need to understand the dynamics in order to capitalize. Here’s a primer.
The biggest change is that buyers seem to be taking a collective deep breath, which is taking some of the heat out of the demand side of the equation. Whether due to rapidly rising mortgage interest rates, rapidly falling stock portfolios, general burnout from the competitive marketplace, or maybe all of the above, some buyers have decided to take a break while others are just being more discerning. Depending on the neighborhood and the individual property, we are seeing fewer offers, less aggressive bidding, and in some cases, listings going past their published offer review dates with NO offers.
As a buyer, less competition for the home you are after doesn’t mean there is NO competition. But there may be 5 offers instead of 25 and with the strategies we’ve honed over the past few years (i.e. release of non-refundable earnest money, escalators with significant increments, pre-inspections, waiving contingencies, understanding what the seller needs, etc.) you can really improve your odds of winning.
Properties that have gone past their offer review date can also present an interesting buying opportunity. No offers on review day can be the wakeup call a seller needs to get them to adjust their thinking on price and other deal terms. But beware, there are others out there looking for these same opportunities and I’ve seen the second wave of post review day interest create an aftershock competition of its own!
Even if things continue to soften a bit I believe that buyers thinking they will wait, time the market just right and grab a deal after a coming market correction will likely be disappointed. We saw market conditions very similar to today’s back in 2018. That “correction” saw prices slide about 6% over a 6-month period. Four years later very few even remember that market. And if you completely mistimed a purchase and bought at the absolute peak right BEFORE that market swoon your house today is still probably worth about 50% more than you paid for it. If you plan to be in your new house for a few years don’t miss out on the house of our dreams looking for a deal in a seller’s market.
For sellers, the shifting market means you’ll need to be on your game and pay close attention to all the details. Today’s more discerning buyers are less likely to look past the peeling paint, worn carpet, overgrown landscaping, mossy roof or general household clutter that they may have overlooked 6 months ago. They are certainly less likely to pay a premium for a property with these shortcomings. Today’s market also requires sellers to be more strategic when pricing their homes for sale. When buyers were flocking to listings under the assumption that they would have to go 15-20% over the asking price to compete, overpriced listings would still sit. Today the margin for pricing error is even smaller and the result of a mistake can be painful (and expensive).
The listing and selling process always has a lot of moving parts, but the importance of making sure those parts all fit together is heightened in the current environment. Should I do a pre-inspection prior to listing? How much staging and home prep do I need? Will I consider an early offer? Do I even need an offer review date? The questions and the correct answers are different for each listing, but working through them will drastically increase your odds of success.
My advice to both buyers and sellers in this market is to find an experienced professional you can trust and listen to their advice. Phone lines are open…
Rip. |
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