3 takeaway dishes:
Abandoning certain emergencies (such as inspections) may expose the buyer to financial risks.
Clients need to be emotionally prepared to find a house they never thought of.
Sometimes, entering upgrade terms or a higher margin can make the offer stand out.
Troy Thiel, CEO of the Thiel team of Keller Williams Real Estate in Kirkland, Washington, recently witnessed a sale in the Seattle area for $700,000 and $900,000, and he is not the only one.
Tight inventory has led to a market with multiple quotation wars. Since the beginning of the pandemic, existing home inventories have been at the lowest level in history. According to data from realtor.com®, in January, the number of houses for sale nationwide fell by 42.6% year-on-year. Of the 161 subways tracked by the National Association of Realtors®, 88% announced double-digit annual price increases in the fourth quarter of 2020. After bidding higher than other desired homes, or because of fear of buyers, buyers are making high bids. They will not find other properties that interest them for a long time.
Therefore, how to help your buyers and agents stand out without increasing too much risk?
Why low inventory persists
There are different reasons why housing competition is so fierce across the country, but at present, one of the main driving forces is still historically low interest rates. It attracts tenants who want to enter their homes and the desire for more space during the COVID-19 pandemic. In addition, people who have bought a house a few years ago are caught in the predicament of low interest rates. They don’t want to bother to sell or try to find better things. Therefore, they remain unchanged.
Good luck to those who want to build a new house. According to data from the American Association of Home Builders, construction costs have skyrocketed, and timber prices have risen 130%, which has increased the price of single-family houses by more than $16,000. Tariffs on Canadian timber transportation have also hindered the development of construction materials.
Thiel and his wife Karen Thiel work together to help clients find the best house within their budget. The Thiels area of Seattle is facing a lot of problems with housing. With all high-tech companies paying huge fees to their employees, developers will focus on building high-end luxury houses. This means that finding housing for low- and middle-income families is a tough job.
“We saw a lot of flippers here,” Troy said. “They took away grandma’s old house, demolished the house, and built three more in the original place.”
But this is not enough to generate enough housing to meet demand. Now, he sees a new trend during the pandemic: People don’t have to go to the office anymore, so they have found places in the suburbs and rural communities where they can call home.
The best advice for your agents and customers
First of all, you don’t want your buyer to overspend, regret buying a house or lose the deposit due to some problems.
Lutalo McGee, owner and executive agent of Ani Real Estate and team leader of McGee Team in Chicago, said he tried to teach agents how to navigate the system when buyers have unrealistic expectations. He said customers need to be emotionally prepared to find a possible house or to pay more than expected.
“Sometimes, you have to let them fall on their own,” McGee said. He saw that what the customer wanted was so bad that they did not listen to suggestions, provided too many things, and gave up unexpected events such as inspections, which could expose them to huge financial risks or make them Later suffered catastrophic house repairs.
In 2008, when McGee first set foot in the industry, the economic recession had just begun, and home buyers could buy homes for 20% of the U.S. dollar. “They will chase that unicorn,” McGee said. But now, agents must analyze the market on behalf of their customers and present the data in a convincing way.
He explained: “Once you look at prices, price trends, and market average time, you need to be straightforward with your customers.” “If they want property, they will have to do something that may be different from before.”
McGee said that there are a few things that can help buyers win offers. Put in the upgrade terms. The buyer must be willing to exceed the best offer at a certain price. Put down larger, serious deposits. Give up on emergencies. If the assessed price is low, the buyer will not ask for a lower price. Make a cash offer.
McGee said: “If things don’t go well, you may suffer losses in assessment and sincerity money.” “But your customers should be aware of these risks throughout the process.”
McGee said cash buyers are now uncommon in the Chicago area. But quotes higher than listed prices continue to be prominent. So, how much does it cost to your customers? It all has to do with their budget and ability to take risks.
He said that agents should tell their clients that they want to use all the information provided there, including newsletters from local agents, real estate blogs, listing tools, real estate reports, and the expertise of local real estate professionals, so they can fully perform Educated before and throughout the home search.