If you know any buyers or buyer agents active in the crazy seller’s market of 2021, you are likely hearing stories of bedraggled angst. So many buyers. So few properties. How is a first time buyer supposed to compete?
Part of me still thinks today’s settlement is a dream I am going to wake up from. It all started in March when Mr. Buyer’s father (an agent in Florida and former seller client of mine) called and let me know his son and daughter-in-law were ready to buy and looking in Gainesville. On March 20th Mr. and Mrs. Buyer and I met for the first time and discussed the market. Mrs. Buyer had an extensive list of properties that had caught her eye. After running down their wants and needs, I asked if they would be able to see any homes the following day, which was a Sunday and very likely to be deadline day for offers on anything still available.
There was one house that meet their wants and their needs, so we booked a tour. They walked through carefully, made some observations and decided they could see themselves living there. A handful of questions later, we were on our way to the office to write up an offer. The questions were:
How much over list price do you think this property is worth?
How much earnest money do you want to put into the deal?
Are you willing to have a home inspection with the right to void only?
In this competitive market, Mr. & Mrs. Buyer knew that if they missed the boat on this home, the next one would be more expensive. They offered $25,000 over a list price of $535,000 and made a $20,000 low appraisal guarantee. They made an earnest money deposit three times what would be customary to show the seriousness of their intentions to get to closing, offered free rent back to the sellers and did the home inspection right to void only. THEY WON! They saw one home, wrote one offer and WON!! I’m still pinching myself.
Best of all, thanks to the efforts of a fantastic listing agent who took time to meet the appraiser, they never had to cough up more down payment. The house appraised for the sales price.
It was a very easy road to closing for these two. Success is possible when you know your strengths and show them. Having cash to put into extra down payment these days to show you are serious about the high offer you make is a must. Higher earnest money deposits show you are in it to win it. And working with a great local lender with a reputation for getting deals down is another must.
If you have been looking to purchase in this market, let’s talk. Let’s figure out what your strengths are and how they can work for you in this intensely competitive market.
Buyers are feeling the pressure in Bristow and Gainesville. There is so little inventory. Searches on media websites used commonly by consumers often have outdated information. A buyer may send me a listing from one of these sites, feeling they just found their dream home, only to have me run it through our local MLS and find out it sold two months ago, or that it went under contract three weeks ago and is about to close.
In general, the best way to find properties is to have your buyer’s agent set up an automatic home search directly from the MLS. The more basic the search criteria the better. Today, I was out with buyers who have a home search set up in specific cities, below a particular price, with minimums of four bedrooms, three and a half bathrooms, two car garage and at least a partially finished basement. That’s pretty open criteria. And the reason why is that many listing agents put in the bare minimum when inputting a new property.
The issue of poor data entry showed its ugly face again when my buyer called me, having found a great home in the adjoining neighborhood where we had just looked and wondered why a particular property hadn’t come up on his search. A little CSI real estate work and I found the answer. The agent hadn’t entered the basement was finished at all! Despite having a bathroom, full recreation room and even a den, the listing agent didn’t bother to note it was fully finished or partially finished. Apparently, the photos are the lazy agent’s way out of doing any data entry. Why type when you can just upload a ton of pictures…unlabeled of course.
That wasn’t the only offending listing agent. My buyer, feeling he was missing out on homes, hit a media site and found another one. Same issue. Fully finished basement not noted as such.
A former colleague’s saying about listing agent data entry sticks with me every time this happens. “Garbage in. Garbage out.” Simple and true. Too many listing agents let the pictures do the talking and fail to realize how the data they enter may play into a property search. If you have a listing with a fully finished basement, why not say so? I check every box I can when I have a new listing. Then again, I know the power of the data I put in.
Of course, we can’t change the data entry of listing agents across the board. That left the only remedy–remove the criteria for basement finish all together. My buyer’s home search went from ten listings to thirty. Most are going to be unfinished basements they will have to weed through, but we don’t want to miss anything. Too bad not all listing agents take their jobs seriously.
Meanwhile, you have to wonder how many serious buyers who were looking for finished basements missed these opportunities.
No matter how fast paced the Bristow/Gainesville real estate market gets, the road map to a real estate deal can feel overwhelming to buyers and sellers…especially sellers who are turning around buying. The reality is that the road map involves a final destination, and a lot of ways to get there. Which way is right for you?
The road to your destination becomes clear one simple decision at a time. Points of decision in a real estate transaction are the foundation for future decisions. A well trained, professional agent can break down the forks in the road to you as we get to them, or see the road blocks ahead by a poorly informed decision. For instance, a professional outside the stress of moving can help you understand why prioritizing not moving twice as the only way to achieve selling and buying severely limits your choices. It may even have you not moving at all in the current market. Home sale contingencies are a non-starter for sellers seeing multiple offers and the top echelon waiving all contingencies.
What about if you found a three month rental you want in the market to which you are relocating, but the contractors improving your home for sale here are not able to finish the listing prep in time for you to list, settle and secure that rental? Is a short term rental really worth leaving tens of thousands of dollars on the table and listing in as-is condition? These are things we think about as trained professionals.
Knowing what is important to you is key. Absolutes are limiting. Flexibility is something that always delivers the best results. Just like experiencing a traffic jam on the highways, knowing the back roads to get from Point A to Point B are important. Full time professional real estate agents know those back roads inside and out.
Ready to hit the road to your next real estate destination. Pick a great navigator! Get in touch with me and let’s start with a couple starter decisions and the path will reveal itself.
Oh how I wish I was here to tell you about a reduction in the number of buyers looking for property in Gainesville, VA. Until there is a reduction in the number of buyers, the insanity of our current seller’s market will continue. Today, it hit a new low in my eyes. Let me tell you about it.
Buyer clients brought a property to my attention that meet their needs, based on the description. The photos (professionally done) reflected a townhouse with an older roof, no deck, no fence and very outdated kitchen and bathrooms. However, from the photos it looked well maintained. The seller was not allowing any showings of his home due to concerns surrounding the pandemic. Offers were going to be collected sight unseen. The winning buyer will be able to walk through the property after their offer is accepted.
Well, in this market of demand beyond any seller’s imagination, that seller will likely get multiple offers above list. I had a buyer client interested in it and, after hearing the bad news that their highest and best offer on another townhouse in Bristow (one they actually saw) was nowhere near good enough to compete, it was off to the sight unseen.
Upon further investigation, it seems the photos that looked good were from five or six years ago. This particular seller has a habit of hitting the market higher than market value and not selling. Hmm. What’s going on in there? When I asked the listing agent if they were reflective of the current condition of the home, the response I got floored me.
“I don’t know. I haven’t been in the home.”
So a listing agent took a listing and priced it without even seeing the inside? They took the seller’s word for it and another agent’s photos with no idea what they are actually selling the public beyond the address? That, in my opinion, is about as unprofessional as you can get. And yet, buyers will throw themselves at the opportunity. They may not have agents that investigate the situation and discover they know as much about the listing as the listing agent who has never been in the home.
Having a full-time, local, professional agent on your side has never been more important than it is right now. When every condition in an offer has to favor the seller, you are competing against dozens of other buyers and can’t afford to be hoodwinked, taking calculated risks is important. This was not a risk my buyers decided to take, but at least they were able to make an informed decision. Seller with a history of not selling (even in seller’s markets,) five year old photos and an agent with no actual idea of what is happening in the home. That’s a pass.
In the Bristow/Gainesville real estate market, listings are selling fast and way above list price. Seven to ten percent above list price..sometimes more. If you are out looking for a home, you are going to be most competitive shopping below the highest you can go.
What do I mean by below your highest price? Probably that magical seven to ten percent below your ceiling. That gives you room to be competitive in a multiple offer situation.
Things that are helping buyers win, particularly in first time buyer properties, are low appraisal guarantees or waiving appraisal all together. If you have maxed out your budget going higher, higher for bigger or better properties, these are not things you will be able to do in your offers.
Trying to buy in a seller’s market is maddening. By the time you have been let down a couple times, prices have crept up even more. It’s the reverse of a seller trying to come to grip with a buyer’s market. Sellers will hesitate to get ahead of the market and lower their price to be the most attractive home on the market when it’s flooded with inventory. Meanwhile, sellers like that have lost tens of thousands in following the market down. Buyers in a seller’s market end up costing themselves by not getting super competitive sooner. Maybe $385,000 seemed like too much when you were shopping at $360,000, but by the time you can stomach $385,000, you need to go to $400,000 to be competitive the next month. It’s that crazy.
Need a knowledgeable, full-time engaged agent in your corner when it’s time to buy? Get in touch with me and I’ll help you navigate through the quickly changing landscape of the current Bristow/Gainesville seller’s market.
Buyers in Need of Closing Cost Help Are Getting Shoved Out of the Market
Last year (2020) Bristow and Gainesville buyers in were still able to be successful among their competition of multiple offers with closing cost contribution requests from the seller. This was true in all price ranges, as multiple offer situations consisted of a few offers, if that. As the year moved on, however, multiple offer scenarios started to grow out of control. A dozen offers on a townhouse was not unusual. Four offers on a single family home was common.
Wrapping up last year and entering this year and it is all out madness. My first encounter with all out madness was with first time buyers in December, making an offer on an outdated single family home in Bristow. At the time, it may have been the only home on the market in Bristow in that price range. What I didn’t expect was for my buyers to be the thirty-first offer among fifty–five. And that home sold for over ten percent more than it’s list price!
My first listing side experience with the all out madness was with a $635,000 home I listed in Gainesville. Comparable sales supported our list price, but not much higher. Twenty-six offers later, it sold for $676,000. Not only were closing cost help requests not present, but a small percentage of buyers were waiving every contingency. That scenario repeated in two more listings. Yet, despite the intensely serious buyers, there are still some asking for closing cost help or coming in with otherwise undesirable terms.
If you are in the market to buy right now, here are some bullet points you need to know:
Closing cost help is becoming extinct. If you can’t afford to pay your own closing costs, save up or talk to your lender about financing them into your loan.
Have a home you need to sell before you buy? Ask for post settlement occupancy from your buyer. The max they can give you is sixty days if they have a mortgage. Use THAT period to house hunt and be prepared to find temporary housing. A home sale contingency, or settlement of buyer’s home contingency is simply an added layer of risk sellers don’t need to take in a market with buyers dropping as many contingencies as possible.
Show your level of seriousness with a high earnest money deposit (EMD.) EMDs are only liquidated to the seller if you default. An EMD of $12,000 on a townhouse priced at $400,000 says, “I have no intention of losing this money.”
Home inspection contingencies with the right to ask for repairs is another contract clause becoming extinct in our market. Even right to void only inspections are getting left behind for buyers that are willing to do inspections for informational purposes only. This is a tougher one and really depends on the property, but talk to your agent about what is most competitive and still comfortable for you.
Radon inspections are a no go. Know up front the cost of a radon remediation is about $1,000-$1,200 dollars. If you can afford the fix, don’t add another contingency. If you can’t, save up a little more until you can.
Who you work with as a lender is very important. A local lender who specializes and prioritizes purchases over refinances is key to a faster closing. Credit unions are not advised. In their world, every loan gets on an assembly line regardless of whether they are purchase or refinance. This leads to delays and can put you at risk of default.
The current market is not impossible, but it is very difficult to navigate if you aren’t working with an experienced, full-time agent who is seeing the shifts in conditions as they happen. Pick a busy agent who knows the market. They know the conditions.
Pictured above is the Flat Stanley project my young cousin mailed to me from Pottsville, PA over a decade ago. It has very little to do with being a licensed Virginia real estate agent, but doesn’t that custom Virginia touristy t-shirt look great? That’s me going the extra mile, something I do for my clients every day. Incidentally, Flat Stanley attended one of my broker pre-licensing classes when he visited Virginia. He may know more about Virginia real estate than a well decorated agent, licensed in Maryland and Virginia, that sent me an offer on listing recently. Yes, that’s an exaggeration, but not by much.
Buyers have no idea how important it is to have a competent, well respected agent in the area where they are looking to purchase. When you are buying in the western suburbs of Prince William County, located about forty-five minutes from the closest point in Maryland in light traffic, you may want to hire an agent that does the majority of their business in Virginia. In multiple offer scenarios, full-time local agents that have thriving businesses know what their buyers are likely up against. They also likely have relationships with the local listing agents. Finally, they have knowledge of the Northern Virginia Residential Sales Contract inside and out.
In an intense multiple offer situation recently, I received an offer for my seller from an agent in some poody-doo production club with a well known franchise brokerage. Opening the document, what struck me was that it was over ninety pages. The average offer was about twenty-four pages. I was afraid I was going to find every piece of buyer brokerage paperwork in it. What I found was a document that repeated itself with Maryland disclosures and when I got far enough in, an offer for another home. The competence issue was immediately apparent. This agent had ZERO idea what a Virginia offer had to contain and was so flustered getting it together she included another offer for another property.
Being licensed in two states/jurisdictions means nothing if you aren’t competent in what each one requires and work in them regularly. I imagine, for instance, that agents that live in DC or near the borders of their states like Arlington or Lovettsville in Virginia, would regularly be pulled into neighboring jurisdictions. Being based in Prince William County, VA I rarely have a reason to go into Maryland. The idea of being licensed there to get one deal every four years seems awful. When I am representing someone else’s best interests, I need to KNOW what I am doing. The best business practice for me is to refer that buyer or seller to someone who deals with the local contract and market day in and day out. In fact, I just did it earlier this week with a former neighbor needing help selling a family home in Ocean City, MD.
Being licensed in Virginia is definitely enough for me. If you need help in Maryland or DC, I will find a fantastic agent to help you. The goal in real estate is to do what is best for the client. When it comes to dealing with Prince William, Fairfax and Loudoun Counties, I can go that extra mile. That’s because the basics are a walk in the the park when you practice Northern Virginia real estate daily.
In the rough and tumble world that buyers and buyer agents are experiencing in the Bristow/Gainesville real estate market from 2020 to now, opportunities to enter into a ratified back up contract on properties is one being missed by many. The general objection, when offered to enter into a ratified back up contract, most buyer agents decline after talking with their clients stating, “They really don’t want to be tied up and unable to pursue other properties.”
Being tied up and unable to act on other properties is the farthest thing from what being a ratified back up buyer means. There are two choices in the NVAR Contingencies/Clauses in the back-up contract clause from which buyer deadlines are measured. 1) From the date the contract is ratified or 2) From the date the contract becomes primary.
Whenever I have a listing with multiple offers, I advise my sellers to select a buyer they would like to be a back up. From there, I approach buyer agents with the opportunity, explaining that the option chosen for deadlines will be the date the contract becomes primary. That means that the buyer’s are not obligated to deposit earnest money, do inspections or anything until they receive notice from the seller that their contract has moved into primary position. It is the only way for a buyer to save their place in line and still shop for another home.
What happens if the buyer goes under contract with another property while they hold a ratified back up contract on another property? That’s easy. The buyer sends notice (which their agent will prepare and they will sign,) voiding the back up contract since they have gone under contract elsewhere. Knowing all that, you can see where being a back up contract is no obligation. In fact, it can be the very lottery ticket a buyer needs.
With demand being so high and inventory being so low in Bristow and Gainesville, buyers get very spun up in the competition that multiple offer scenarios bring. Buyer’s remorse is not uncommon. It happens more than a buyer may think. What’s the harm in being a back up contract? The townhouse pictured at the top of this post was purchased by the back up contract buyer in early 2020 when the primary contract buyer wanted to renegotiate their contract with the seller after having a home inspection and having second thoughts on the price they offered that won the bid. That back up buyer was thrilled!
Just like the lottery, a buyer can’t get that chance to take a property they wanted for an absolute certainty if they don’t commit to being a back up contract. It’s a no brainer to me as it has no downside and the potential upside is highly desirable. There would be no putting the home back on the market after the first buyer falls through, making another possible multiple offer scenario. It would just be under contract with the back up buyer.
Back up contracts are powerful tools, but only work if you USE them. In other words, you can’t win if you don’t play. Those were words I used to hear my father say every time he played the lottery. Well, if you want to be the next buyer in line for a particular property that you lost out on in a multiple offer scenario, you better enter into a ratified back up contract with the seller and eliminate any future competition.
If you are a first time home buyer, you may wonder how much time it takes to tour a home. Really, it depends on two things:
Your level of interest in the home
The size of the property
If you don’t like a home in the first few minutes, the tour may only take ten minutes, if that. It may take twenty to thirty minutes to tour an average sized Bristow or Gainesville townhouse, when you are interested and checking things out. By contrast, forty-five minutes in a four bedroom single family home with three finished levels seems to be the right amount of time for an interested buyer. Add in a pandemic and many sellers not wanting to allow overlapping showings, and sometimes you are touring a single family home in fifteen minutes. That’s because that is the only time frame available, or the listing agent is only allowing fifteen minute showings to let in as many buyers as possible.
I have been known to book two back to back fifteen minute showing times to accommodate my buyers. Sometimes, I don’t have a choice and my buyers just have to roll with a fifteen minute showing window. You do what you have to do to see a home these days.
What is crazy is to think that you probably spend more time grocery shopping. You definitely spend more time picking out a new car. And I know the ladies out there can spend hours shopping for the perfect outfit for a special event. Why does a house tour take so little time?
Being in a home the major things buyers look for is the feel of the layout. Does the floor plan work for their daily lives and have the space they need? They look at the privacy of the lot and determine if it is satisfactory. Are the finishes pleasing? The reality is that, by the time a buyer is touring a home, location has been determined along with some key components the buyers want or need.
The home inspection, which takes anywhere from two to four hours depending on the size of the home and the process of the individual inspector, is where buyers really get an in-depth look at the home they are purchasing. Unfortunately, in the 2021 seller’s market, many buyers are having to forego a home inspection just to get under contract. That’s frightening, since this is when buyers get the “test drive,” so to speak.
If you are looking to purchase in Gainesville, Bristow or the surrounding areas this year, make sure you have a full-time, experienced professional looking out for your best interests. It’s a tough market with a lot of potential pitfalls. Representation is the only way to go.
In the Bristow/Gainesville first quarter real estate market of 2021, we’re picking up where 2020 left off. Sellers are in the driver’s seat due to extremely low inventory and intense buyer demand. In fact, it’s crazier right now than it was in 2020.
A townhouse or single family home can sell for well above a reasonable list price after dozens of offers. Sadly, some listing agents are advising sellers to under price homes to open the market up to more buyers. The reality of that move is not good. You just disappoint those buyers in lower price ranges.
Buyers tend to get list prices stuck in their heads as absolutes. Sort of like buying something off the shelf at Target. It says the price is this, so that’s the price. Not in house hunting. It’s more like an eBay auction for a hard to find item around the holidays. The bidding between interested buyers can drastically increase the price.
Does that mean that buyers are over paying for homes right now? Considering that the sale of every home becomes the most recent comparable sale for other homes in the neighborhood, no. There is no such thing as over paying in this market. Just like there is no such thing as a “deal.” You get something below market value, well, your sale just affected market value and brought down neighborhood values. It’s all relative and no real estate sale occurs in a bubble.
Do buyers need to be concerned about prices coming down in the future? I don’t know if they need to be concerned about it, but prices don’t always go up. What goes up, must come down. There are always options available if you find yourself upside down and unable to sell in five years or more. At today’s super low interest rates, most mortgage payments can be easily covered by the going monthly rental rates. And of course, higher down payment buyers may never been upside down.
The reason to buy a home is stability and control over your living situation. Yes, your home is a investment as well. Sometimes, however, the money you make is money saved on taxes due to the mortgage interest deduction. Or not having to spend money moving every year or two because you landlord is not renewing your lease.
Want to discuss a purchase in the 2021 market and how it may affect you in the future? Get in touch with me and let’s see if a purchase now makes sense for you.