What does it feel like in the market when you have a slight cool down from the scorching hot beginning of 2021? Well, it feels a little weird, a little unsure, still a bit frantic, if you’re in the buyer’s seat. For seller’s, it’s frustrating and can be surprising. As we know, the market goes through cycles, over this past month we at The Neighborly have been experiencing the “Buyer Cool Down,” on both sides of the transaction, so naturally, we want to share with all what this means and how it affects you as a buyer or seller.
For the past 12 months we have been on a crazy upward trajectory in terms of prices, the slowly growing up-curve of pricing was normal at first, then started to really get going around August of 2020. With so many people moving to the valley, we saw demand increase- and with Covid-19, we saw supply shrink as would-be-sellers decided not to sell due to restrictions, fear of having the public enter their homes, etc. These two factors combined to create a major shortage of housing and a demand that far outweighed supply. Bidding wars, over asking, no contingencies, begging on our hands and knees was the only way to get a home under contract for a buyer. This craze continues in some price points, so we aren’t out of the woods yet, but no more groveling is necessary. Steadily more homes are hitting the market, there are more choices for buyers and more price reductions than I have seen in many months.
It’s definitely time to hit reset, get back to a more normal pace of business, and re-evaluate whether you are a buyer, seller, or even an agent. Below, we have 3 tips for buyers and 3 tips for sellers to consider now that the market has started to shift.
Buyer’s
Tip 1- Spend Some Time
When visiting a potential home, spend some serious time in there, think about how you would live; where you would put the brooms, how much you can fit in the pantry, where you would put the couch, etc. Don’t rush it just because there are others in the home (during an open house) or have an appointment right afterward. If the home is a serious consideration, you need some time. Ask your agent to set you up for at least 30 minutes and/or see if you can visit the home again in the evening. Seller’s like it when buyers spend time in the home- it can be nerve-wracking when you receive an offer from a buyer who saw the home for 5 minutes.
Tip 2- Keep Your Contingencies
Buyers have been conditioned to waive appraisals, accept properties in “as-is” condition, and sometimes even offer their earnest money as “hard money” or non-refundable. Pump those breaks, you may be able to structure your offer to give you some protection while also making you stand out. Ask your agent to explain an “Appraisal Guarantee,” and/or see if you can maintain your inspection but only for, ‘large, structural issues.” There are ways to avoid feeling backed into a corner with your earnest money at stake.
Tip 3- Stop Scrolling
This is more for your mental health than anything. When you get a property under contract, best to see it through. The endless scrolling through Zillow’s new listings won’t help you feel good about your contract. There will always be great houses hitting the market, but the one you have under contract just might be the best one for you. Of course, there are exceptions to this rule- a house you previously offered on comes back-on-market, your literal dream home since you were a child hits the market, or something perfect for significantly less in the exact location you want is available. But, these scenarios are rare. Give the home you have under contract a fair shot.
Seller’s
Tip 1- Set Realistic Expectations
Your neighbor just sold their house for $900,000- it’s the same floor plan, same sized yard and their house has a pool. So, let’s not get crazy here and price your home at $1 Million, 30 days later. While the market is hot, buyers are still going to run the numbers and appraisers are still going to do their job. Make sure your agent shows you the annual appreciation in your neighborhood and your competing listings around so you can get a good sense of what it will be like to be in the buyer’s shoes. It’s tempting to price high, but you often will sit on the market, get low-ball offers, and possibly even end up with a canceled contract from a shortfall appraisal.
Tip 2- Be Proactive
Making sure all systems are a “go” before you hit the market is essential. Service the HVAC, fix the pool equipment, have the roof re-coated, power wash the exterior, etc. Don’t skimp on the repairs and upgrades before you hit the market. Not only will your home show beautifully, but you are likely to get through your inspections quickly and easily.
Tip 3- Don’t Compare
Everyone’s got a story. Your friend might have sold their home and told you all about their magical sale and how they are the king of everything- but your friend is also the “king” of hyperbole and you know it! Your transaction and sale are unique- it will require a little give and take, it will likely leave both parties satisfied and happy- that’s how deals typically get done. In the end, and especially in this market, the seller walks away with a lot of equity and should be proud of that fact alone.
We hope that whether you’re buying or selling, these tips prove helpful- or maybe just entertaining! If you are looking for professional guidance in this market, we are here to help. Send us an email to hello@theneighborlyphx.com