Why the Media is Wrong about this Housing Market.
You know I love a good story time!
A few days ago, I wrote a great offer for great Buyers on a great house and our offer was straight-up rejected. Yep, you read that right, our offer was rejected…in December…with rates near 7%. In the midst of a media firestorm of misinformation designed to make you BELIEVE the housing market is in the tank, I’m here to explain to you why they are wrong.
Why did this happen? And what can you do to make sure you A. get the house next time (or at least give it a scouts try!) OR B. have the same result as this fortunate seller in this “collapsing” market.
Let’s break it down and debunk some current market myths in the process…
Yesterday there were 8 offers on this house in a time period where rates are some of the highest they have been since 2003. So how did the sellers achieve this? Here we go…
THE SELLER’S SIDE OF THE STORY…
The Sellers “right-priced” the house. “JoAnn, don’t you mean priced the house right?” Nope. They right-priced it. Here is what I mean by that… the sellers determined the price niche most sought after by Buyers in their area, and priced the home a little below market value, with room above the price for people to offer over asking, and still stay below their price ceiling. Smart move.
The Sellers had it completely ready to go. What do I mean by that? They had it very nicely staged, the home had just the right amount of furniture for each room. Each room also had a purpose (very important- treat your home like a model home and give every room meaning). You are selling the lifestyle of the home – along with the brick and mortar. Also, every room was cleaned, painted, and it smelled fresh.
The Sellers took the first offer seriously. They didn’t get one offer and think, “if we got an offer this quick – I wonder how many we will get in a week?” Bad strategy. So, once they had one offer, knowing that buyers’ anxiety levels would be high, they set an offer deadline that gave other Buyers a short window to get in and see their home and craft an offer. This helped to avoid stress from all parties and nobody had days and days to feel fatigued.
The Sellers bought (and will sell) in a good school district. I cannot stress enough the old adage, “What you buy, you must sell”. I know what some of you may be thinking- I don’t have kids, my kids are grown, my kids go to private school, etc etc. However, value follows the school district and always will. If you buy in a popular school district with good scores and a decent greatschools.org rating, you will experience higher yearly equity and probably sell faster – when the time comes. School districts should matter to you, whether your kids have two or four feet.
NOW…THE BUYER’S SIDE OF THE STORY.
What the Buyers did right (I know, they still didn’t get the house, but they wrote a great offer, and after all, this is a learning lesson.)
The Buyers had their finances in order, their Pre-Approval was in my email ready to go, and they had a significant amount of hand money available. Another positive was they didn’t have a sale contingency on their home – so they were free to buy without selling their current home (I have advice on ways to do this so reach out if you want to discuss).
The Buyers didn’t let the rates get in their way. They knew the rates are higher than normal, but they also planned on re-financing their mortgage when the opportunity arises in the next couple of years.
The Buyers offered minimal contingencies and an inspection waiver with a fixed dollar amount. They didn’t feel comfortable buying a house without a home inspection, so they opted for an inspection but offered a dollar value waiver – omitting repairs or issues up to a certain amount. This gives the seller peace of mind that they won’t be “nitpicked” over small repair issues.
The Buyers offered a flexible close date. I make it a habit to call the listing agent and find out as much as I can about the sellers and what their preferences are. Offering a closing date that is advantageous to the seller takes a lot of pressure off of them, and can put your offer in a much better position to be chosen.
MOVING ONTO THE MISINFORMATION…
For over two years now, the market has been in control, leading us and we’ve had to be reactive to it. But the media is painting us a story that is far from the truth. In Western Pennsylvania, we have gained over 20% equity in our homes in a little over 2 years! So if we lose a few percentage points in value, let’s say 5% to be generous, we are still UP OVER 15% equity in two years (and in many local areas this has been significantly higher). Those numbers are astoundingly excellent.
But what does the news spin this to be? A downturn in the housing market with home prices falling. A disaster ahead they say. No one even has a footnote that says “you are still up 15%+ over the last two years, and that is darn good.”
There is no such thing as a national real estate market. The real estate story that truly matters is the local one. Sure, national stats give us trends, which are useful in predicting the future. However, in reality, Pittsburgh is NOT San Francisco, and acting like they are the same is unrealistic. Some areas of the country (San Fran one of them) saw an equity increase of OVER 40%! I don’t consider that a sure thing, however, because what goes up that much, will fall a little harder when it comes back down.
Western Pennsylvania real estate has always produced conservative gains, and in turn, has never produced large deficits like other parts of the county experience. I’ll take that as a good thing because it helps me believe home prices here are relatively solid, and if we do see some reductions in sale prices and values, they should be minimal at best.
Thanks for letting me get on my soapbox and debunk some myths about this local real estate market. If you are selling this coming year – take the above story into account – remove as many of the negatives as you can from your property – and present it to the world in its best, brightest, and “smart-priced” light.
If you are buying, remember if you can afford the payment, you can afford the property. Mortgage rates are cyclical and will rise and fall – when (not if) the rates get better – you can refinance to a lower rate. If mortgage rates don’t ever fall again, you have captured the lowest mortgage rate possible on your new home. Either way, you are building equity, establishing roots, and doing it your way. Remember, when you rent, you are still paying a mortgage – your landlords!
Thanks for reading!
— JoAnn