The last few spring buying seasons have ranked pretty high on the insanity scale: multiple bids, bids over ask, bidding wars. Well guess what? This spring looked a whole lot like last spring — only worse.
We want every one of our clients to find the perfect home, so it’s frustrating when that goal becomes harder to achieve. But that’s all the more reason that you want to involve pros.
Now you wouldn’t be wrong to say it’s kind of crazy every spring. That’s more or less true. But it’s the intensity of craziness that is worth talking about. And the big sign—tight inventory—suggests it’s going to be worse.
A market hasn’t been this out of balance since 2008-2010. And in that case, the imbalance went in the other direction.
The chart below shows you how the market started a little bit early in each of the past three months and became more targeted once February arrived. A large chunk of transactions happened in the first half of the year.
And each year gets more intense. About 1,700 homes went into contract in April 2014. That number surged by 35 percent, to 2,300, in 2016.
Okay, so we’re expecting more people to buy earlier this year than last. What’s the big deal, you ask?
Well, when you layer on the inventory issue, demonstrated in the chart below, the issue comes into focus more clearly.
More people are looking to buy, but there are fewer homes on the market for them to look at. Starved of options, they’re putting houses into contract much faster than they were just a few years ago.
Buyer desperation abounds …
Use every tool at your disposal.This is the best way to get through these conditions and find the home you want.
These conditions breed desperation. What does that look like? Well, you have potential buyers running ads, networking in desirable neighborhoods, doing anything they can to get a head start on a home before it makes it to market. I’m hearing rumors of people making inquiries when they see someone doing maintenance, like painting or landscaping, assuming they’re getting it ready for sale. This is especially likely in communities where housing stock is hardest to find.
And it’s no good, in our opinion.
Yes, of course, we are Realtors, so we don’t like to hear about buyers intercepting sellers before they have a chance to go to market. So we recognize the bias and expect you to take what we offer with that in mind.
A word to sellers
So here’s the thing. If you’re an unrepresented seller and you get approached by an aggressive buyer, that’s because that person is hoping to score a deal, i.e., pay less than fair market value. And he or she knows the chances are better if they can keep an agent out of the game. Makes sense, right? So you can be sure that almost any unsolicited offer will below the value of your home.
And remember: The same competitive pressure that drives price also drives terms…
Where buyers are desperate, the value you hold isn’t confined to selling price. You also have leverage when it comes to terms.
I understand that the idea of selling your home sans commission is pretty enticing. But if you give up all the money saved by agreeing to poor terms, you’re not really coming out ahead, are you?
A word to buyers
Well over 90% of the homes that are transacted flow through MLS.
If you want to make sure that you’re looking at the vast majority of homes for sale in a market, you need to make sure you have access to the most current MLS listings. If you haven’t engaged an agent with that access, you’re likely not going to see the full range of homes available.
There are times where a buyer expresses interest in getting our help, but there isn’t a full commitment. If we catch wind that that buyer is going directly to a seller without us, we’re afraid we’re not going to invest a lot of time in that relationship. And we think our peers would say the same. We want to work with people who want to work with us.
Buyers, this is America. You have the right to approach sellers directly. But you have to expect that real estate professionals will be putting the best listings in front of formally engaged clients first. Your hesitancy to engage a Realtor . may limit your exposure to the best listings the minute they come available.
And yes, agents are frustrated, too…
If ever there was a time to involve a pro, it is now…
There are a host of other reasons to include professionals in your real estate process. You want to deal with the best lending practices. You want the friendliest contract structures. You want to make sure the appraisal process works for you. But we will discuss these another day.
We’re not saying it’s impossible to get a good deal when you wall off a transaction from Realtors. Bad things won’t necessarily happen. But we know for a fact that the likelihood of a positive outcome is quite a bit lower when you step outside the buyer/seller/Realtor structure that has been evolving for hundreds of years.
We know these are extreme market conditions. And we want every one of our clients to find the perfect home, so it’s frustrating when that goal becomes harder to achieve. But that’s all the more reason that you want to involve pros.
Use every tool at your disposal. That includes using professional agents who work hard, understand the particulars of a winning transaction, and will go to the mat for you. This is the best way to get through these conditions and find the home you want.