Am I Getting Market Value For My Home Today?

Strong emphasis on “today”! The Coronavirus Pandemic has impacted the real estate market in more ways than one here in North Carolina.

2020 showings in North Carolina were tracking steadily along the same path as 2019 showings. Then on 11 March, showings took a nose dive and today, 5 April, showings are down 74% since 11 March.

According to Durham’s Stay At Home Order (click here), real estate services are considered non-essential – aside from appraisal and title services. In-person showings and open houses are prohibited. Other surrounding counties may be allowing in-person showings but Durham appears to be more restrictive.

Nevertheless, real estate transactions are still taking place. Upon entering my office this morning and checking the activity that occurred over the last day, I see 36 new listings came on the market and 24 homes sold. In full disclosure, this is activity that had occurred in Durham County as well as these counties: Alamance, Orange, Person, Granville, Wake, and Chatham.

For sellers that are putting their house on the market today and receiving / accepting offers, are they getting market value? Market value is an opinion of a home’s value partly defined by its exposure to a competitive market for a reasonable time prior to sale.

Since the number of showings are down so significantly, how competitive is the buying market when, in some cases, buyers cannot take in-person tours of homes and instead, must rely on videos and agent walkthroughs. Undoubtedly, most buyers would not put an offer on a home unless they were able to see it in-person. Less showings and fewer offers makes for a much less competitive market. Therefore, it can be argued that less competition means lower prices.

Many sellers are waiting until the market returns to some form of normality. On the other hand, sellers that are entering the market today are the highly motivated sellers – those that may HAVE to sell their home. That pressure alone may force that seller to take the first offer or any offer for that matter, further reducing the likelihood of receiving market value as the home may not have been on the market for a reasonable time prior to the sale.

Bottom Line

If you are one of those sellers that HAVE to sell their home during this pandemic, one way to ensure you’ll receive market value for your home is to hire an agent that will conduct an in-depth comparative market analysis and explain the numbers to you.

Photo credit: amycgx on VisualHunt / CC BY-NC

Don’t Let Frightening Headlines Scare You

There’s a lot of anxiety right now regarding the coronavirus pandemic. The health situation must be addressed quickly, and many are concerned about the impact on the economy as well.

Amidst all this anxiety, anyone with a megaphone – from the mainstream media to a lone blogger – has realized that bad news sells. Unfortunately, we will continue to see a rash of horrifying headlines over the next few months. Let’s make sure we aren’t paralyzed by a headline before we get the full story.

When it comes to the health issue, you should look to the Centers for Disease Control and Prevention (CDC) or the World Health Organization (WHO) for the most reliable information.

Finding reliable resources with information on the economic impact of the virus is more difficult. For this reason, it’s important to shed some light on the situation. There are already alarmist headlines starting to appear. Here are two such examples surfacing this week.

1. Goldman Sachs Forecasts the Largest Drop in GDP in Almost 100 Years

It sounds like Armageddon. Though the headline is true, it doesn’t reflect the full essence of the Goldman Sachs forecast. The projection is actually that we’ll have a tough first half of the year, but the economy will bounce back nicely in the second half; GDP will be up 12% in the third quarter and up another 10% in the fourth.

This aligns with research from John Burns Consulting involving pandemics, the economy, and home values. They concluded:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

The economy will suffer for the next few months, but then it will recover. That’s certainly not Armageddon.

2. Fed President Predicts 30% Unemployment!

That statement was made by James Bullard, President of the Federal Reserve Bank of St. Louis. What Bullard actually said was it “could” reach 30%. But let’s look at what else he said in the same Bloomberg News interview:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support.

According to Bloomberg, he also went on to say:

“I would see the third quarter as a transitional quarter” with the fourth quarter and first quarter next year as “quite robust” as Americans make up for lost spending. “Those quarters might be boom quarters,” he said.

Again, Bullard agrees we will have a tough first half and rebound quickly.

Bottom Line

There’s a lot of misinformation out there. If you want the best advice on what’s happening in the current housing market, let’s talk today.

Should I Sell My Home During The Coronavirus Pandemic?

Absolutely You Should!

When it comes to selling their home, owners typically don’t take the task too lightly. Once the decision to sell is made, it’s all “systems go”, “full steam ahead”. If you must sell your home, then by all means, sell it!

Some Agencies Have Stopped Listing Homes

That’s the truth. There are some real estate firms, nationally known for that matter, that have decided to pack it in and close up shop. They are advising their agents to stop taking new listings.
But, there are still many real estate firms, like West & Woodall Real Estate, that are more than willing to help homeowners in these difficult times.

What Precautions Should We Take?

As we used to say in the military, “Improvise, Adapt, and Overcome”. There are many precautionary measures we recommend home sellers take to prevent contracting Coronavirus. Many you’ve already heard, but they’re worth repeating.

1) First of all, virtual marketing will take a front seat over in-person showings. This is not to say there will be no in-person showings. However, we’ll continue to provide virtual tours of homes either through recorded videos or live real-time walk throughs of homes. This way, a potential buyer could quickly eliminate homes without ever having to step foot in them.

2) For those homes that a buyer “must see” in-person, we’re recommending to our sellers they provide hand sanitizer at the entrance AND soap with disposable paper towels in one of the bathrooms nearest the entrance.

3) We would ask that all buyers please remove their shoes upon entering the home to prevent the spread of dirt and germs throughout the home.

4) It’s probably a good idea to limit the number of buyers entering the house to 2. One way to ensure this happens is by not allowing for overlapping showings to prevent the possibility of 2 or more sets of buyers ending up in the home at the same time. Of course, during the showings, agents should maintain the recommended 6′ radius from the buyers (a.k.a social distancing).

5) Home sellers should clean and disinfect frequently touched objects (ie. light switches, door knobs cabinet pulls, faucet handles, banisters) and surfaces once the showing has ceased. The best way to sanitize your home is by using either a bleach solution (4 teaspoons of bleach per quart of water) or a minimum 70% alcohol solution.

6) To minimize the risk of potential contamination, sellers should not be present during showings.

What If I’m Extremely Susceptible To The Coronavirus?

Please assess the risk given your particular situation. Older adults and people who have pre-existing conditions like heart disease or diabetes seem to be at a higher risk for developing serious complications. If you are part of this group then perhaps it would be best for you to self-quarantine at another location until you accept and offer and eventually close on your home.

Photo by Kelly Sikkema on Unsplash

What’s Your IBuyer Experience?

WHERE DOES IT HURT?

Let me start off by saying, yes, IBuyers satisfy a need in the home selling market. That’s kind of obvious since their success and expansion in many markets throughout the country is testimony for their business model.

So what is that need? There are home sellers that just don’t want to deal with what goes into selling a home. They don’t want to deal with getting their home market ready by fixing this and repairing that. They don’t want to have to keep their home neat and tidy as it’s being shown to prospective buyers. They just want to snap their fingers and have their home sold. IBuyers can do that.

Just like any convenience in this “have to have it now” society, it comes with a price. If it hurts too much to bring your home up to market selling standard and to keep it clean for showings, than just pay the price, and that pain goes away. But…what is the price?

Now we’re getting somewhere. Where does it hurt more: in getting your home market ready and keeping it that way until it’s sold OR potentially, paying tens of thousands of dollars for that convenience? You get to choose and apparently, many home sellers are willing to pay that hefty price tag for the convenience of washing their hands free of their home in order to quickly move into another. And I’m good with that. To each his own.

WHAT THE SELLER DOESN’T KNOW

Do you really believe the IBuyer is willing to give you market value for your home? Of course they’re not willing to give you market value because they have to turn around and sell your home!
IBuyers are in business to make money. Yes, I understand there are always exceptions to the rule as there are times when an IBuyer actually comes relatively close to market value.

On the other hand, I have seen sellers get burned big time. I spoke to a seller who sold their home to an IBuyer and when I spoke to him on the phone he said, “I had no idea my house would sell for what IBuyer sold it for!”. What does that tell you? When IBuyer presented the seller with an offer for his home, the seller didn’t know what the market value was for his home at that time. IBuyer sold the home for $17,000 more than what IBuyer paid the seller for the home PLUS the seller had to pay more than the 5-6% commission a traditional agent would have charged.

Granted, I mentioned earlier that IBuyers are filling a market need. However, sellers need to be aware of the total fees they will have to pay the IBuyer in order to go through with the deal. Some IBuyers will advertise fees that they claim amount to less than what a seller would have to pay a traditional agent but when all is said and done, the seller ends up paying way more than what was advertised.

WHAT THE BUYER DOESN’T KNOW

IBuyers will do their own inspections on a home and quite often, they bring in a group of inspectors as a team: inside inspector, outside inspector, general home inspector, etc. Sometimes the current homeowner is present during those inspections and may offer insight into what works and what doesn’t around the home.

The IBuyer is represented by a licensed real estate agent who acts as the listing agent for the property when the IBuyer now turns around to sell the property. This listing agent has a duty per the NC General Statutes to “discover and disclose material facts” about the property. Should the listing agent be present at these inspections in order to satisfy his / her legal duty? Or, maybe it’s not feasible for the listing agent to be present at the inspections but should the agent at a minimum, be given a copy of all inspection reports and understand what his / her seller is going to repair or replace? These are important questions because listing agents and buyer’s agents work cooperatively during a real estate transaction and any information provided by the listing agent helps the buyer to determine whether they want to proceed with the transaction.

It’s been my experience that listing agents representing IBuyers never even visit the property prior to listing the home for sale and consequently, don’t have any information to relay to interested buyer’s agents and their respective client buyers.

Photo credit: satguru on Visualhunt.com / CC BY

Why Married Couples Make A Great Real Estate Agent!

MARRIED COUPLE = ONE

Did you catch that? I called a married couple a single agent. That’s because they are a union – a permanent bond with the strength and determination to succeed as a single entity.

A married couple offers many advantages over a single agent and even large real estate teams when it comes to real estate transaction efficiency and effectiveness.

Unlike a single agent, a married couple can be in two places at the same time. One spouse can be meeting the photographer at your current home while the other spouse is meeting the inspector at your new home.

Similarly, one spouse can be holding an open house at your current home while the other spouse is working hard prospecting for buyers for your home.

A married couple can get more done in less time.

THERE WHEN YOU NEED THEM

As a seller or buyer, situations arise when you inevitably need to talk to your realtor asap. With a married couple, you have two numbers to call. If you receive a busy signal for one spouse, just dial the other.

Even large real estate teams will have a designated individual (typically called a transaction coordinator) assigned to a buyer or seller to call. But again, it’s a single phone number. A married couple offers higher availability than a single agent.

WHO DID WE MEET WITH?

There are many real estate agents that have formed large teams that can consist of dozens of agents. A single agent’s name may be on their business card but behind that name are scores of agents working under that agent. The team may consist of specialized listing agents, buyers agents, transaction coordinators, administrators, and inside sales reps.

The listing agent’s job on the team is primarily to meet with sellers in an attempt to earn the seller’s business by listing their home. Once the listing agent gets the listing agreement signed, they’re on to the next seller. In fact, sellers may never speak with that listing agent again. Instead, the seller may be passed on to a transaction coordinator whom they have never and will never meet in person.

When married couples meet with sellers, the relationship that’s formed persists through the transaction and beyond. Married couples have “skin in the game” whereas members of large teams may earn a salary even if the transaction never closes.

HANDLE MULTIPLE PERSONALITIES

Are you familiar with the four personality types?

1. Analytical
2. Driver
3. Amiable
4. Expressive

I won’t take up the space here to describe them as I prefer not to steer too far off topic. However, if you’re interested, there’s plenty of info on the web.

Spouses with dissimilar personality styles are well-positioned to handle the multitude of personality types they’ll likely encounter during real estate transactions: buyers, sellers, and other agents.

The benefit comes in handy especially during negotiations, whether the negotiation is about price or when negotiating repair requests. Have you ever dealt with a driver personality type?

They tend to be demanding, have little patience, and get right to the point. A driver against an amiable in a negotiation can most definitely turn into a WIN / LOSE scenario. Please refer to my other post: Real Estate Negotiations: A Zero Sum Game?

On the other hand, if one spouse is also a driver, than a driver vs. a driver could more easily turn into a WIN / WIN scenario.

When looking to hire a real estate agent, you should seriously consider a married couple.
If you’d like more information or you’re interested in a no-obligation consultation, please don’t hesitate to call or email.

Photo by Sandy Millar on Unsplash

The 3 Best Reasons To List Your Home During The Holidays!

The months of May & June have historically been the “hottest” months for home sales in Durham County. In fact, going back 11 years, home sales have peaked in either May or June in each of those years. So then, tell me again Chuck, why I want to list my home during the end of the year Holiday Season? Three reasons…

1. Less Competition!

More homes on the market means more competition for you – the home seller. Buyers have a wider selection of homes to choose from and as a result, they have a stronger negotiating position when it comes to what they are willing to pay for your home. And, if you’re not willing to concede on price and other terms, they could just move on to the next home.

Many sellers say, “I’m going to wait until the spring to list my home”. Yes, you and every other seller is thinking the same thing! Going back those same 11 years (to 2009), guess what month has consistently, every year, had the fewest number of homes enter the market? December. So put your home on the market in December when everyone else is waiting for the spring.

2. More Money!

Buyers have fewer homes to choose from and are more willing to pay a higher price for one when they find it. Since 2015, December had the highest average sales price, year over year, than any other month in that year. More money for the sellers! Keep in mind, December 2019 numbers are not out yet as of this writing.

3. Serious Buyers!

Let’s face it. As families get together over the Holiday Season, house hunting does not rank high on the list of fun family activities. If someone is willing to look at houses during this time, they are serious buyers! That is of course, unless they just need an excuse to get away from that one family member who just…

Please be safe this Holiday Season and enjoy time off with your families. And if I’ve convinced you that December is an opportune time to put your home on the market, please don’t hesitate to reach out to me. I’d love to help you out.

Photo by Benjamin Smith on Unsplash

Real Estate Negotiations: A Zero Sum Game?

Real estate negotiations don’t need to be zero sum games – where one side’s gains equal the other side’s losses. In other words, negotiations don’t need to be win / lose or lose / win or lose / lose scenarios. The outcome should truly be win /win. ( Stephen R Covey’s fourth habit of highly effective people).

Add Value If It’s There

I’ve been involved in way too many negotiations in Durham County, Orange County, and Alamance County where I’ve had to stop and ask myself, “does the other realtor really want this deal to go through?”. In one such negotiation where I was representing the seller, the buyer’s agent flat-out told me their client had no interest in the detached studio in the back of the property. In fact, she said, her client will probably just use it as a spare room. As a result, the agent significantly downplayed the value of the building and consequently, offered a much lower price than the market value for the property.

Little did the buyer’s agent know, her client became a little too friendly with the neighbors during a second visit to the property and told them she and her husband were so excited to find this home as the detached studio in the backyard would allow the husband to continue his passionate pursuit of an old hobby that was placed on hold for a few years.

Many agents out there will give kudos to the buyer’s agent for not disclosing personal information about their client. I wholeheartedly agree. However, whether the buyer will make use of the detached building immediately or in the long term, or potentially never, there’s value in the building so let’s assign a dollar amount to it.

Agents Can Be Unreasonable

I’ve also come across negotiations where the seller on the other side was just so unreasonable. On one such occasion, I was representing an out-of-state buyer. After I formulated a detailed comparative market analysis, my numbers told us the seller was at least $30,000 overpriced. I freely shared my complete analysis with the agent in support of the accompanying offer and guess what? She refused to budge one dollar! I asked her if this all made sense to her and she was adamant in her belief she was going to fetch the asking price. Eventually, the home left the market unsold (aka expired).

Buyers, of course, can be unreasonable too. I’ve had buyers fishing for the deal of the century! They’d make lowball offers on multiple properties, including one of ours, in an attempt to pit the sellers against each other. There are measures a seller can take to counteract such behavior and if you’re interested, please feel free to reach out to me.

It’s All Wrong, But We’ll Take It!

I’ve also had a buyer’s agent, during the negotiation, tell me everything that was wrong with my listing: no garage, no bathtub in the owner’s suite, and too small of a kitchen. The only response I could think of at the time was, “I think you put an offer on the wrong home”.

Hot Market Is Not Win / Lose

Let me just clarify something here. Just because there’s a “feeding frenzy” in certain hot market neighborhoods where multiple offers come in at above list price, that does not necessarily mean the chosen buyer loses and the seller wins. It’s still a win /win since this is an example of market dynamics at work. If the buyer wants to “win” the property in this market, he’s going to have to bring the highest and best offer.

Other Agent Not Ready To Play

What happens way too many times than I care to admit, is the agent on the other side of the negotiation doesn’t actually know if the listing price is too high or too low. Truly, I’m ok with that – at least they’re honest and willing to learn. Either they ask me for my comparative market analysis or I will fully explain why the house is priced the way it is. Once we are all on the same sheet of music, the rest of the negotiation runs smoothly.

Here’s the bottom line, let the facts speak for themselves, let’s play honestly and fairly together, so we can mutually bring the buyer and seller towards the end goal of allowing them to move on to their next home: all in the spirit of a win / win outcome.

Photo by Michał Parzuchowski on Unsplash

What Agents Have That Homeowners Don’t!

Agents have their fingers on the pulse of the market. Since we sleep, eat, and drink real estate, day in and day out, we have a feel for the market.

There’s no other way to explain it. The data can remain consistent from week to week and month to month, but agents with “boots on the ground” have a sense when the beat is slightly off.

Over the past 6 weeks, the Triangle Multiple Listing Service (TMLS) data has been consistent regarding the number of active listings, months of supply, and days on market on a week to week basis.

But something’s not right. The number of price reductions or as many agents will say, price improvements, has been escalating. And unfortunately, I don’t have the numbers for price reductions but that goes back to my point, good agents have their fingers on the pulse of the market and can sense when the beat is off.

It’s also helpful that I work in an office (a big shout out to West and Woodall Real Estate) with some top notch / top gun agents. They’re truly some of the best you’ll find in the Triangle. And when we all start sharing this feeling, it’s not a coincidence.

Along with the higher than usual number of price adjustments, the number of buyers has appeared to diminish too. So, is there data to back up our feelings? Of course there is. You really didn’t expect me to say “no” there, did you?

Let’s look at homes priced between $100,000 – $400,000. I chose this range because more than 73% of all showings are for homes in this price range.

Over the last 90 days, homes in this price range averaged almost 9 showings per listing. Now, if we just take the last 30 days, the number of showings per listing was only 5.66. That’s more than a 36% drop in the number of showings per listing! So our feeling that the buying pool is starting to dry up was correct.

Fewer showings means more days on the market before a home sells. Sellers put their homes on the market anticipating it to sell in X number of days because that’s what the data was telling them. Sellers need to be in their new home by such and such a date so what do they do? Reduce the price to make that date. And maybe several price improvements.

Also, as we enter the “slow time of the year”, sellers need to understand the odds may be stacked against them. Now please, I’m not by any means suggesting sellers do not put their house on the market at this time, that’s not what I’m saying. In fact, there are many reasons why a seller would put their home on the market now but I’ll leave that as a topic for a later post.

All I am saying is the odds of selling your home has slightly decreased over the last four weeks. A month ago, a seller had a 73% chance of selling their home whereas today, they have a 69% chance of selling.

So what does this all mean? It means you, as a seller, need to hire a knowledgeable, professional, full-time agent that has their fingers on the pulse of the market.

That agent could have advised you on the price reductions taking place in the market along with the decreased traffic and lower odds of selling your home so together you could agree to price your home ahead of the market. Your home would be priced correctly to increase foot traffic and therefore, increase the odds of selling your home so you could meet the deadline of being in your new one.

Photo on Visualhunt

The #1 Feature That Both Millennials And Luxury Home Buyers Want!

As you can imagine, there are some differences between what millennials (born between 1981-1996) are looking for when buying a home versus what the luxury home buyer wants in a home.

For one, millennials are looking for less space, not more space. They prefer functionality of space over more space. For example, they would rather convert a yoga studio into a spare bedroom for overnight guests than have a dedicated spare bedroom.

Luxury home buyers desire larger driveways as they typically own numerous vehicles. Millennials, on the other hand, have a stronger walkability requirement along with access to public transportation or other ride sharing services.

But what’s that one feature or features that both millennials and the luxury home buyer desire in a home? It’s sustainability. According to one definition, sustainability means living within the resources of the planet without damaging the environment now or in the future. It’s about creating an economic system that provides for quality of life while renewing the environment and its resources.

For both groups, that means solar power. Solar powered homes and in the case of luxury home buyers, solar powered pools. There’s also a trend towards smaller pools too as opposed to pools that take up a large chunk of the backyard. California has gone so far as to require all newly constructed 1 to 3 story homes built beginning in 2020 to have solar power.

Additionally, it means more environmentally friendly homes such as homes that have been constructed with recycled building materials like reclaimed wood and finished using cleaner paints.

According to the EPA, “Nationwide, landscape irrigation is estimated to account for nearly one-third of all residential water use, totaling nearly 9 billion gallons per day.” Sustainability is all about conserving that precious resource.  Luxury home buyers are looking for eco-friendly landscaping like artificial turf to significantly reduce wasteful water use through landscape irrigation.

Homes that are National Green Building Standard Certified appeal to both millennials and luxury home buyers.

Many luxury home builders have been incorporating sustainability features into their homes for several years now. This trend will continue as millennials have progressively been buying into the luxury home market. In fact, Realtor Magazine states buyers under 35 years of age now account for one-quarter of all Toll Brothers Homes purchased. Toll Brothers is the largest luxury home builder in the United States.

Photo credit: Greens MPs on Visualhunt.com / CC BY-NC-ND