Partly because I'm working in the real estate industry and partly just because I'm interested in the real estate industry, I regularly consume articles and blogs and editorials on what's happening in the market. I'm pretty sure I'm on every e-blast list in the Free World, as well. (Zillow, realtor.com, fellow agent newsletters, etc., etc.) Below are some patterns I'm following and feeling (not to be confused with the respected opinions of economists, experts, or experienced brokers).
Up and down and round and round...this market is not for those with motion sickness...
1) It's basic supply and demand.
If you have more people wanting to buy things, and less things to buy, prices go up. And things sell in shorter periods of time because people feel like they have to snatch them up before they're gone. (Think Tickle Me Elmo from the 1990's...) Marry that with low mortgage interest rates, new pandemic working-from-home scenarios, the growing number of people retiring or downsizing or both, and you have low inventory combined with high interest in lifestyle change. That's pretty much the gist of it.
2) Timing is everything.
My sweet little bungalow in Jacksonville, where I was resident for 7 years and landlord for 13, magically became vacant again at the height of the market. Lucky me! So why not sell? As wonderful as our tenants have been...are we tired of the taxes, insurance, lawn care bill, repair bill for the broken microwave? Magically, we are also embarking on a new investment venture in parallel, so the stars aligned to sell. Perhaps it's time for Mom and Dad to downsize, or for you to downsize, or the condo you bought in a fire sale in 2009 is now worth three times what you paid for it. And it's paid off. Time to sell?? Hmmmm...
3) You still have to live somewhere.
As tempted as it is to sell your home while you can bank the inflated equity, it may not make sense if you don't have somewhere logical to go. If you sell high, you will likely also have to buy high. Not rocket science. There are reasons to rent, though...if you're in transition, want to try a 55-plus community first before you invest, want to scope out a new town before you invest, want to wait until prices level out before you invest, want to rent an RV and travel before you invest, etc etc. For what we could make on our condo, however, I believe I could possibly live in a POD or the trunk of my car.
4) Location, location, location!
From the media reports and anecdotal stories from friends and neighbors, perception is bidding wars are abounding and overpriced homes are being snatched up in a snap. Not all communities -- and not all neighborhoods -- are feeling the frenzy. In Patrick Square, a traditional new construction neighborhood development in Clemson, all of a sudden many empty nesters/retirees are clamoring to move there. They've visited the sales center many times over the years, or have friends in the neighborhood. I've literally had people I've never met call me to build a relationship so they can get inside scoop on what's coming, and fellow realtors call me regularly to remind me they have buyers waiting and "would I please call them first next time." When there were plenty of lots and floor plans and options to choose from, they weren't nearly as interested. Or...see #2.
5) There is cash...and there is not.
When my parents listed their home built in 1974 last fall, we had multiple showings and contracts come through quickly -- and then disappear quickly. Four times. The "cash buyer" didn't actually have the cash (at least not all in one accessible location), the family whose "heart sang" when they saw the home didn't realize you had to have a downpayment in order to get a loan, the "handyman" who wasn't afraid of the cost of renovation walked as soon as he saw the inspection report. (see #6) Pre-approval letters are good to have on paper for financed buyers, but they are just that -- paper. Loans are also currently taking at least 45 days, as title attorneys, appraisers, and other resources who support the process are backed up and booked up. In commercial or land sales, it's often the City (insert your city here) getting the blame for the delay -- or a bright-and-shiny new funding source which may or may not be granted.
6) The inspection report is not the Bible.
My sister believes home inspectors are part of the mafia, and my father says the only reason they exist is to kill a deal. My personal belief (and experience) is they offer a very useful service with a very specific purpose. To simply point us to things which could use a closer look. They are not electricians, they are not plumbers, they are not HVAC experts, or roofers, nor do they claim to be -- and you may not care if one of the electric socket plate covers is cracked or the tub is missing a stopper -- especially if you really love the home and the location. As the buyer, you can join them on the inspection, as well -- they work for you. The best inspection reports I've seen mark items by degree of concern, and the best inspectors also talk you through what they find so it's not so daunting. The best buyers treat the report like one of the tools in their home buying toolbox -- and manage their expectations accordingly.
Side Note: Typically, the buyer has the right to ask the seller to repair anything on the report -- and the seller has the right to refuse. It's super helpful to have ballpark estimates on repairs to inform a fair negotiation -- and to know where the real deal breakers lie. Recently, two of my Patrick Square sellers clearly accepted punch list items from the builder that could have/should have been corrected before they closed -- and the new buyer discovered them on the report. For that reason, I also recommend buyers hire a home inspector for new construction as well as resales -- it's money well spent if you are not a construction professional, yourself.
7) Buying and selling "pre-listing" is risky and can be very stressful.
As a real estate practitioner (or a homeowner), it sounds dreamy to have a home sell before the ink is even dry on the listing agreement. Woo hoo!! Right?? Twice in six weeks, my sellers got good offers before their homes were posted publicly for sale. And although it saved them (and me) the inconvenience of showing it, the frantic pace created enormous pressure on all of us.
Here are some examples. The day I put the sign in the yard, Home #1 got a verbal offer on the spot which was accepted on the spot. Which fell through later, because the buyer wanted the "missing tub stopper" replaced and the seller refused (not the real request but you get the gist). Home #2 was quickly claimed by my fabulous co-worker's buyer the evening we signed the listing agreement. No sign, no lock box, no marketing -- and no back up. Exciting...except the seller hadn't found their new home in another city where sales were occurring so fast, they couldn't travel fast enough to get to them. My parents got a heads-up call from the salesperson in their community...good news! The home they previously lost to another buyer just a year ago was going back on the market, "but if you want to see it before I list it, it will have to be tomorrow afternoon." So at 80 and 86, they made an out-of-character snap decision (and a cash offer) to keep from losing it to the open market, then spent the rest of the week agonizing over it. (We worked it out...we are moving them again this month!!! yay)
8) For Sale By Owner...plus and minus...
Sellers...I totally get it...you want to sell your home yourself so you can save the commission. This is actually easier than ever now with Google and Zillow. I was firmly in that camp and tried to sell my Jacksonville bungalow both ways -- and here's what I learned. The buyer who ended up being real and sane and actually had the money, also had a professional, knowledgable, and communicative realtor. I could have done it all myself and worked both sides of the deal and saved the 2.5%...but boy, was it a LOT easier with Super Realtor Chloe pulling the forms, meeting the inspectors and contractors on site, setting up and managing the title attorney, and negotiating the price and terms. She even presented me with a bottle of champagne at closing! It was already emotional...and she made it a pleasure.
This is not a shameless plug for the broker community -- just a reminder -- there is much more to real estate transactions than it seems. Lots of little details and little hassles and little reasons "we need to come by just one more time, would it be OK?" If you are also living in the home you are selling, you have no one between you and the buyer, on top of multiple life interruptions necessary to keep the process moving forward. If you are the buyer, there is risk of missing an important step or detail. Then there is the complicated law (keeping the lawyers in business) and cavalcade of forms on top of forms (keeping the regulators in business). On the flip side...there are also plenty of unprofessional realtors who lack knowledge and are not communicative, so choose carefully before you hire. And do your homework if you decide to ride solo.
What's your experience? Enjoying the roller coaster? I'm not quite ready to get off, although you might see me lift my hands and scream.
Some resources I like...
PS (Tickle Me Elmo is now available at Wal-Mart for $26.99.) :)