I listed a home this week which has booked over 40 showings (!!) in just over 24 hours on the market. We've got two offers in hand already despite the fact we plan to spend four more days on the market before making any decisions.
The prospects for a bidding war are excellent and in some ways, this whole experience feels a lot more like the market of 2021 than the market of 2024.
So what gives? In short, it’s about value.
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This is a single owner home dating
to 1972 with lots and lots of “original” inside of it. Original kitchen, original baths, original
windows, original paint and carpet. There
are security bars on every window, heavy duty steel security doors on every
entrance and it takes about 13 different keys to navigate through all the
random installed deadbolts that have been added to the home through years.
You would think this is a dangerous
neighborhood, but it’s not. It’s
actually a super nice neighborhood, and a quick look at the comps shows that
homes routinely sell in the $600k - $700k range with any updating at all.
It’s an estate sale situation, and
rather than take four months fixing it up and sinking $50k or $60k into it, the
family wants to move on. So it’s listed
at $525k, making it a true “value play”.
There are two types of homes right
now that are drawing lots of attention in our early spring market. Elite homes in great locations which simply
stand out regardless of price… and fixers priced well below market but with the
promise of instant equity for anyone willing to do the work.
Between these two extremes is what
I call the “mushy middle”, and that’s a much harder space to navigate.
If your home is an okay area with
some updating but also some not updating or it backs to a busy road or if it’s
priced based off a comp from April of 2022… you are in the mushy middle and
that a very tough place to be.
At the high end of the market,
rates are not as big of a factor. Reality
is there is tons of money sloshing around in this economy and most of it
sloshed up to those who were already well off.
For them, it’s see it, like it, buy it.
At the lower end of the market, properties
that have the ability to generate instant equity constitute value. In challenging economic times, value is
gold.
But in the middle, it gets
mushy. And that’s where 75% of the
market resides. Sellers pricing off a
market (and interest rates) that no longer exist, and buyers deliberating endlessly
over the actual cost of buying a home in a 7% rate environment where house
payments are often 25% or more higher than rents, even with a 20% down
payment. That formula leads to doubt, fear, uncertainty and delay. Sometimes endless delay.
So you have to know what you’re
doing and what segment of the market you are shooting for when you list a home
for sale.
We’re leaving our Centennial
property on the market for a full five days before looking at any offers. I’ve told agents to back twice… go back three
times… do whatever you need to do to make sure you and your buyers understand
what you’re getting into and are willing to own whatever offer you ultimately
submit… because the sellers are not making repairs and will not renegotiate
once we go under contract.
Measure twice, cut once.
I’ve already received two offers on
the home from agents trying to beat the rush (again, we’ve been on the market
for all of 24 hours). The last thing we
want is a rushed offer from a buyer who spent 15 minutes in a home and made an emotional decision to engage with a property that needs a
lot of work.
Slow down. Count the cost. And for the agents, understand that your
reputation is made or broken by the behavior and decisions your clients make
while under your tutelage.
What we want is a solid offer from
an educated buyer with a knowledgeable agent who has run the numbers and
counted the cost. For a bunch of buyers,
this deal will make tons of sense. For
others, it won’t.
As an agent, the fastest way to
disqualify your buyer is if I get the impression you want/need the deal more
than they do. And there are a lot of
agents right now who desperately need deals.
That’s why we’re riding this out
for five full days and will take 60-plus showings on a property that has lots
of upside, but which will also entail a lot of work.
The last thing we want is to
choose the wrong buyer, go under contract and then see the whole thing blow up
in a week when the buyer’s inspection reveals the home needs pretty much everything
we said it would need in the MLS, in our property disclosures and in the dozens
of conversations we will have had with agents.
It’s exciting to have a listing
that the whole world seems fired up to see.
We’ve had very few listings like this since the spring of 2022, when
rates zoomed past 5% and then kept right on going.
Today, it takes either the right property
or the right value proposition to get buyers to compete. And if you aren’t aware of this, you’ll be
one of the hundreds of sad, sad agents in the mushy middle with listings they can’t sell, sellers
they can’t please and closings that never arrive.
