Real estate isn’t about the housing industry. It is a people industry. Buying and selling real estate is a personal and emotional process for most of us as it is the largest transaction we will likely make. What happens when you’re buying and selling in hyper markets? As we’ve been saying for more than a year, it is a good time for sellers, but it can also be a good, and challenging, time for buyers.
Buying in Hyper-Markets vs. Selling in Hyper-Markets
When we buy a home as a primary residence, where we will live, we are selecting the location and space where we will be with loved ones, where we will sleep, and where we make our investment in the future. I say we because Mickie and I have been part of this market as buyers and sellers and we understand more than many real estate agents, the challenges you’re facing!
We, like you, shop for a home with careful thought and consideration. It is also why excellent counsel from trusted professionals like the team at Newman Realty is so vital to the process. Today we find ourselves with Sellers having the control of what happens in the transaction and Buyers having to make what we see as out of the box offers, among them being cash offers at selling price being counteroffered for more cash!
For Sellers, price is the highest consideration and in today’s market, that is surely the case. They also want to control the timing of the closing, possession by the buyer, and personal property included or not. It is safe to say that the majority of our clients also care if the buyer is going to owner occupy the home or if it is being purchased by an investor.
All of these considerations have significant emotional responses attached to them and are the primary drivers of how the buying and selling experience will go for either party. In a balanced market there is a good opportunity for things to go well without too much stress. Home is on the market for a couple of weeks, has some showings and a buyer presents an offer. Negotiations may ensue and then it is on to escrow, inspections, appraisal and closing. Typically, everyone comes away with what they want if the transaction is well handled by the Realtors and everybody plays by the rules.
What happens when the markets are hyper?
By contrast, when markets are heavily slanted to one side or another, things start to change.
During the housing recession of 2008-2012 we saw the impact of a hyper-buyers market. At that time our local MLS system topped out with about 55,000 active listings primarily in the metro Phoenix area. Buyers held all the cards and both buyers and sellers knew it. The opportunities for feelings to be hurt and emotions to run high were enhanced by the market that business was being conducted in. Leverage for sellers was almost non-existent and buyer requests on terms or repairs were forcefully applied. It was not pretty for either party really.
Today we find ourselves on the opposite end of the advantage spectrum.
Sellers are in the driver’s seat with extremely low inventory of available homes and off the charts demand for housing. As of today, our MLS system shows just over 4,800 active homes for sale, a number I have never seen before in 17 years of business. Buyers are overbidding properties by large amounts and losing out to other offers. Multiple offers are a given on any property that comes to market. List price is a benchmark for what your offer needs to be well above for consideration and buyers stress and anxiety is through the roof. Again, even with the advantage strongly to the sellers, this is not good for either side.
Buying and Selling in Hyper-Markets: Personal Experience
As empty nesters, we are experiencing today’s market personally when we decided to downsize.
When we listed our home in the Cooley Station neighborhood of Gilbert, Arizona, it was only a Coming Soon listing on February 8th. The phone started ringing immediately! There were knocks at the door and before we went to Active listing status, we had dozens of appointments to show the property.
On the first day on the market, we had a written offer $20,000 above our asking price with a buyer waiving his appraisal contingency. Later that day, we had a cash offer $10,000 above asking price. We had not even been on the market for 24 hours, much less held our first open house. This was not surprising to us as we understand the current market and expected heavy activity and multiple offers but it still is not exactly fun and it is still emotional.
We care tremendously about our neighbors and we have an emotional attachment to the house that makes us want to be sure the person or family that buys it loves it as much as we did. We want the best price we can get and not leave anything on the table.
While it may sound great to be selling in hyper-markets and to have multiple interested parties competing trying to one up each other to buy you home (let’s face it, it’s better than waiting for the phone to ring), it does not make the process any less stressful.
I do not believe any agent enjoys making the call to another colleague that their extremely competitive offer submitted on behalf of their client was not accepted. We don’t like to make that call because we have been on the receiving end of it. When there are 15 offers on the table, and a seller can only sell to one buyer, then there will be 14 phone calls or emails to share the bad news. It’s tough, it’s emotional and for the buyers it is extremely personal.
Our job is to represent our clients to the best of our ability regardless of the market trends where they are buying or selling.
Selling in Hyper-Markets
For our part, we don’t take short cuts on listings even in a hot seller’s market. We put the same effort into marketing and promotion of the property that we do for every other listing. Professional high-resolution photography and video for online exposure, intentional open house, promotion on social media and other outlets, and anything we can do to make sure as many potential buyers as possible are aware of the property and why they should be interested in seeing it. It always pays off in the end, and in my mind, it is just good business.
Today’s market is hot for the sellers, somewhere down the road it will be advantage to the buyers. Regardless of buying or selling, our team stands ready to assist you and those you know with a high standard of professional care, a proven track record of success and a consistent effort to help you achieve your goals regardless of market forces.