April 2021 – the pandemic real estate market continues to be exhausting.
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- Making contingent offers in this market
- One of the #1 most important parts of an offer to “win” the offer
- Coming soons in-house
- A breath in the market and bidding wars
A Breath in the Market?
Maybe some of the irrationality has ceased? I’m not doing a market update this month; most of what I wrote last month remains the same. But:
- It looks like the absorption rate of new listings is slowing down a little bit.
- Houses that are selling super-fast often will get two or three offers instead of 7 or 10. Or one, and one offer is still good, darn it.
- Zillow views and saves might be dialing a bit back from Plaid (Spaceballs, anyone?)
- What’s happening with lumber is concerning.
- The truism remains — houses that are priced right move.
- One of my jobs is to manage the expectations of my clients. Right now, the market says that if a property (broad brush) is not under contract in under 14 days, then it’s overpriced. Historically, that’s a silly expectation, but currently that’s mostly reasonable.
- From a seller agent perspective: I’m still using a stager for most of my listings, still have professional photographers, still doing video walkthroughs, and still doing custom signs for my listings even if they go under contract before the sign is printed. This market will turn at some point, so it’s to not get lazy now. Marketing muscle memory matters.
I tell all of my clients who are making offers to make an offer that they’re comfortable with winning or losing. If the price is $500K, and you offer $495K because that is what it’s worth to you, great. If you offer $500K with an escalation to $600K and you win (and it appraises if you’re not paying cash), will that really feel like winning?
Recently I had buyer clients, who I know are reading this, and we had made a near-absurdly strong offer and still lost. My email subject was “Well, we lost …” and my first sentence was “Or won, depending on how we look at it.”
I am confident that we won. It was a great house, but there are limits to greatness.
Making Contingent Offers
If you have a house to sell, and want to buy another house, you need to at least have your house under contract, and better yet, have sold it and be renting or staying with family or friends. Painting with a broad brush, very few sellers will consider your offer to purchase their home if your house is not under contract or sold. Why would they, when they have two or three or five or seven other offers on the table ranging from simple 20% down conventional financing to cash? Even paying more or waiving the home inspection* is likely to not be sufficient to overcome the deficiency of a home sale contingency. (* As a buyer’s agent, I”ll tell you, please don’t do that. As a seller’s agent I’ll say please do.),
Moving twice sucks. I get it. But it might be the best option to position yourself to be able to make a winning offer.
The #1 Most Important Thing When Making an Offer
Having a conversation with the other agent. Really. You can learn a lot by asking questions and listening. What we do is not adversarial, but collaborative and cooperative, to make things work for our clients.
- What’s the seller’s best closing date?
- Do they need a rent-back?
- What are they looking for in an offer?
- Will they consider a contingent offer?
- Is the agent good to work with?
Keep in mind that this is good in my market. I talked to an agent in a much larger market and she said that she expects to never work with the same agent twice. That is *insane* to me; I know the good agents — and work damn hard to be one of them– and I know the ones who are not as good, so when they bring an offer, I set my clients’ expectations that the transaction may be bumpy, but we’ll get there.
We now have a lot more tools in our toolbox (you should see my Basecamp) than we did before this market started — appraisal gaps, bonuses for accepting the offer, limits on inspections, appraisal waivers — but nothing is as important as humanizing the transaction and learning what the seller is really looking for. Sometimes, it is price. Sometimes, it’s not, and there’s only one way to figure that out.
Some agent insight: This is the hardest market any of us have ever seen. Every realtor I talk to offers some variation of, “I hate this market.” I talked to one who said his job now is advising buyers to not buy (related: buy or rent during Covid). One said that she’s worked harder in this market than in any other market, writing 6,7,8 offers for each buyer before the buyers either ratify a contract or back out of the market entirely. This market is exhausting and that’s okay; it’s what we do.
Setting boundaries in this business is hard. Really hard. This market has made boundary setting harder.
My wife and family have forever asked me, and helped me, to set limits on how many dinners I miss. Boundary setting is something I advise all new agents to do. Heck, I even define boundaries in my client code of conduct.
I’m still not great at setting these limits, but damnit I’m trying.
Coming Soons and In-House
An email from a reader:
Is it possible for a landowner to give a listing to one trustworthy agent without it being listed in MLS for “just anyone”?
I ask because I have land I want to sell to a conservation buyer, not a standard developer, money not being a first consideration but love of the land being primary.
Sure. Part of my response:
- Pocket listings are strictly in house, with no marketing to other agencies. We market these to other Nest agents and only Nest agents.
- Coming soons may start as pocket listings, but once they are publicly marketed in any way — sign in the yard, Instagram post, email to agents, MLS listing as a coming soon — no showings are permitted until it goes live in the MLS.
There are a lot of reasons to list coming soon, with no showings allowed until the first day of public showings:
- Vet the price a bit.
- Days on market don’t start accumulating until the listing is activated.
- “Prime the pump” for showings, as one of my clients has framed it.
- Get some early interest and marketing while the seller finishes those last tasks before going live.
In-house listings have pros and cons, as most things do.
- Con: Limit the buyer pool — fewer buyers means fewer showings, which may mean lower offers or no offers.
- Pro: Limit the buyer pool — fewer buyers means fewer showings, but likely showings by people whose agents have vetted that the property is actually one they want to see, rather than curious buyers who are still figuring out what they want. If the seller gets their number, they may have more leverage to negotiate a rent-back, or limit inspection stuff, or any other nuance of the contract.
One final thought: There’s a reason I’ve never given up my blogs RealCentralVA and RealCrozetVA. They’re mine; I put my monthly note content on RealCentralVA. My will says that they’re to be paid for for years after I’m gone. WordPress is going to be here; everything else is ephemeral.
What I’m Reading
- Hurling toward Global Suicide
- Households Priced out by Rising Interest Rates
- When Wall Street is your Landlord
- Is There a New Housing Bubble?
- Facebook Just Gave 2.8 Billion Users A Reason To Quit
- Lumber Frenzy Drives Up Home Prices as Suppliers Can’t Keep Up
- High Functioning Anxiety
- Altos Research’s Weekly Real Estate Data reports
- Electric Cars are Changing the Cost of Driving
- A funny TikTok on real estate, sent to me by a client.
- The New Migration: Rethinking Home
What I’m Listening
- Is Apple’s Privacy Push Facebook’s Existential Threat? — I hope so.
- Coded Bias on Netflix — this is a must-watch. This documentary investigates the bias in algorithms after M.I.T. Media Lab researcher Joy Buolamwini uncovered flaws in facial recognition technology.
- Future of Cities, Work, and Office Space — with Dror Poleg – this podcast remains one of my favorites.
Thank you for reading, as always. I truly appreciate your making time to read and if you’re inclined, please share this note.
- Steering and Perpetuating Badness
- Ring Doorbells, Surveillance, and Fair Housing
Jim Duncan, Nest Realty, 126 Garrett Street Suite D, Charlottesville, VA 22902. Licensed real estate agent in Commonwealth of VA.