Published February 18, 2021
As most of you know, I’ve been a real estate attorney for over 40 years, a Realtor for the past 10. I find I am using every skill set I have acquired in my lifetime, in navigating the current housing market frenzy. The temptation to sell a home on your own is great. It seems so easy. But don’t be penny wise and dollar foolish. In this environment a good agent will earn his commission two-fold.
Two weeks ago, I stumbled upon a situation where a seller cost herself $100,000, possibly more by selling her home on her own. Once this sale is recorded, it will be an outlier and continue to come up as a comp over the next six months. The end game in selling a home is no different from selling anything else. It’s not about the cost, the expenses of the deal. It’s about the net. Every sales contract I have put together since the beginning of this year has been at list price or over list with multiple bids.
Prepare your home with an eye towards open space and curb appeal. Address all deferred maintenance issues upfront, from roof to curb, before you list your home and make it active. Consider a pre-sale home inspection, repairing or replacing any defective or deficient conditions found, and then offer the home for sale “Inspection Pre-Approved”.
You will be moving quickly, so start packing your personal belongings before your home goes active. If you are going to be selling furniture, do so now. Move furniture into the garage. Open-up your floor space. You are selling square footage. Declutter, donate, sell, pack, touch-up and clean.
For Seller’s Agent (Listing Agent)
Be clear and straightforward in your advice. You are not selling. You are counselling. Before your listing goes live, clean your calendar for the next 2 days. Be prepared to host showings or be available at the home the first day it goes on the market. If properly priced, staged and photographed you will get 15 – 30 showing appointments the first 2 days and multiple offers.
Prepare the seller for the fact that they will be displaced from their home for most of the first two days. Time what day your listing goes live based on your schedule in order that you are 100% available those first few days.
When you get into a multiple bid situation make sure you give yourself time to respond to offers. If you get multiple bids on the first day (which you will if you’ve done it right), set a time limit for showings and accepting offers for day 2, and publish the timeline in the MLS Public Remarks. Advise your fellow agents that there will be no response until all offers are received at the end of the appointed time.
If you are uncertain or inexperienced in the current environment, seek the advice of your Managing Broker.
Be ready to buy. Anticipate competition. Know what you want. Cash is King. Financing is fine with a strong down-payment and a Pre-Approval, not a Pre-Qualification. Please don’t use words like “I don’t want to get into a competitive bid situation”. Be prepared. You either want to buy a home now or wait. This is the environment currently. Be flexible on terms, closing dates, inspections. This is no time to nit-pick. Take your experienced agent’s advice in preparing the best offer for each property. Know that every home is different, as is every seller’s situation and what they can and will accept. Make sure your agent can guide you through this process.
For Buyer’s Agent (Selling Agent)
Qualify your buyers. Your honest and time-tested advice is key to traversing the current multiple bid environment. When preparing a contract, call the listing agent. Other than price, get all objections out of the way before you make an offer. Make the offer appealing to the seller, while consistent with the buyer’s comfort level. What is the seller’s preference for Closing Date? Inspection Period? Repair Limit? Appraisal Gap Clauses? Price Escalator Clauses? Knowing the seller’s hot buttons in the beginning will not only give you a fighting chance in a multiple bid situation, but may very well head it off all together, securing a Contract that works for both parties.
January 2021 Home Sales.
As I reported in my commentaries over the past few months, home prices are accelerating above my comfort zone of 4.5%. In January, the median sold price of all types of homes, at all price points, was $310,000; 9.5% higher than January 2020. Inventory is at historic lows, a 1.6-month supply based on closed sales, 0.9% months based on pended sales. There are obvious variations based on property type, single family vs condos. Similarly, there are variations based on price point, up to $799,000, $800,000 to $2,999,999, and $3,000,000 +. Whereas median prices for the ultra-luxury market (over $3M) are stable, inventory levels have dropped dramatically. The rich are buying, sales are brisk: 3 months based on pended sales for single family; 0.8 months based on pended sales for condos.
Where are prices headed?
The larger question is whether prices are spiraling out of control. There are close to 2.75 million homes in forbearance. The US has just extended the Forbearance Moratorium on defaults and foreclosures through September. At some point the Forbearance Moratorium will end. When it does, will a surge of defaulting homes drive prices down? Due to a confluence of factors, I don’t think so. Millennials and Gen Xers are the largest demographic group ever, greater than Baby Boomers, and they are just entering their prime home buying years. Interest rates are at historic lows, which the Fed has pledged to keep low for at least the next couple of years. Notwithstanding continued pressure on retail, dining, and hospitality sectors, “remarkable” describes the overall job market recovery In Sarasota County. Prior to COVID the unemployment rate in Sarasota County was 3%. At the advent of COVID it shot to 12%. Today it is 4.7%. Housing’s fundamentals, which were strong leading into COVID, are even stronger today. Further, the number of homes in forbearance will likely decrease as employment continues to improve, increasing housing demand. Conversely, if job growth stalls, slowing price growth, that would temper my concern about prices rising too high.