I had clients check it out, and they were told that if they want to get on House Hunters, just go buy a house and then they will come film you looking at two dogs, and then go to the home you already bought and pretend you are seeing it for the first time.
Fake it until you make it. No truer words have ever been uttered especially when it comes to Hollywood and the make believe of reality TV. Just because you put the word “reality” in front of TV doesn’t make it so. Yet people flock to housing shows in mass because it feeds into their world view that real estate is always a winning bet.
Whether the show is about a couple looking to buy their first home or a show where prospective investors take a chance at rehabbing a former meth home and turning it into a puppy daycare, these shows put out some unrealistic scenarios especially for those that actually buy and invest in the real estate market. Yet that is the rub. Most people never purchase investment property. Most that do own real estate own it as their place of residence. And that is why these shows do so well because they highlight an alternate reality that only works out in scripted reality.
Don’t feel bad for that last seller – somebody will come along and pay him what he wants. Many homes are sold to buyers who are represented by one of the new-age realtors fresh out of real estate school who work for a team.
The good veteran agents are so sick of the frustration that they’re scrambling to build a team of inexperienced agents who will do the grunt work. There isn’t much oversight on whether the price paid is fair; instead, there is more pressure to get another sale on the board.
New and inexperienced agents get so excited about showing a new listing that if it has any shiny stuff, they go berserk and puke all over the listing agent, giving the impression that the buyers will pay anything for the house. When I’m showing a house, people think that I’m just a boring old dude because I don’t say much. It never occurs to them that I’m protecting my fiduciary duty to my buyer by NOT spewing superlatives.
The problem starts when listing agents don’t properly prepare their sellers for the initial onslaught – instead, they get caught up in it too, and think that all the jumping around means that offers will be pouring in any minute.
It used to be that way, but not any more.
If lookers don’t make an offer within 24 hours, they usually don’t make one. It’s too easy to play it safe, and wait for the next one.
By now, the low-inventory/fast-market has trained the motivated buyers to be on red alert. If a new listing pops up that looks remotely interesting, those buyers know to get over there quick for a peek.
This presents a major problem for the sellers and listing agent.
Once the parade of lookers descends upon the new meat within hours, it is irresistible for the ego to go wild, and it causes sellers and listing agents to have visions of lottery-type money.
It is so much fun, they want it to last forever! They are so excited!
Savvy buyers know that if this is THE house, they need to make an offer promptly. It makes the equation quite simple – sellers will receive offers from the motivated buyers within the first 2-3 days. All you have to do is counter for every buyer’s highest-and-best offer, and by Day Four the buyer who will pay the most will emerge.
But what usually happens?
The overly optimistic buyer-agents get all giddy and tell the listing agent that they think they will be making an offer. But a funny thing happens to buyers once they roll down the street for a couple of blocks – all the reasons NOT to buy that house come up, and most buyers talk themselves right out of it. At least half of the people who threaten to make an offer never do.
What if you are a motivated buyer, and make a great offer in the first 1-2 days? It happens regularly that sellers and listing agents will pooh-pooh a great early offer, and hope that there are two in the bush.
What can buyers do? You only have one option, and that is to walk away if you don’t get a response by the time the offer expires. At least if you threaten to quit, it should hopefully get their full attention.
Sellers and listing agents think that lots of visitors = lots of offers. But most visitors don’t offer – they’re just visiting. In virtually every case, the no-offer rate is at least 90%, but sellers ignore that and are convinced there has to be two or more in the bush.
Here’s today’s example:
The seller paid in the low $700,000s in late-2012, and didn’t add anything but lipstick since. We initially offered $1,275,000 last week, and sure got the feeling that we were getting shopped around – the listing agent kept reminding me that there were other offers expected. So we put a deadline of 1:00pm today to accept our $1,300,000 counter-offer. Two hours after our deadline, the seller countered $1,339,000, which was just $6,000 under their first counter. They called it their final offer, and it wasn’t a multiple-counter, so no other offers were on the table.
The sellers paid low-$700,000s, and couldn’t live with $1,300,000 – they had to have an extra $39,000, or the deal was off.
My buyers stuck to their guns, and instead we were off to a new listing that was priced well under this one.
We had a big surge in new listings this week – 98, which is the most since September 12th! We had 46 new pendings too, which is about what our weekly average (48) was for the fourth quarter of 2016.
The party has started!
Click on the ‘Read More’ link below for the NSDCC active-inventory data:
Here we have the 3,019 NSDCC houses sold last year, categorized by how many days it took to find their buyer:
Number of Days On Market
Number of Houses Sold
Percent of Total
0-14 days
1,126
37%
15-30
582
19%
31-45
342
11%
46-60
245
8%
61-75
169
6%
76-90
134
4%
90+
421
14%
Buyers are frustrated and anxious, and they want to buy a house now. Last year, more than half purchased their home in the first month it was on the market.
Sellers should expect immediate action, and take advantage of it! If you don’t want to sell in the first month, then you should wait until you get closer to your preferred exit date.
This is also why the re-freshing of listings is so widespread – buyers want the fresh meat. Check the history of every new listing!
The N.A.R. economist/cheerleader gives his reasons on why sellers should list early this year. Like Yunnie, I don’t think Smoke consults with realtors, instead he just shoots from the hip. It’s not a bad thing, but it leads to lightweight, obvious answers – see article here:
I’ll add my reasons why sellers should get started earlier:
With few other choices and with the school schedule allowing some latitude on timing, buyers have been tolerant about sellers renting back the house. Selling earlier and renting back the house enables sellers to bank their equity and make non-contingent offers on their replacement home.
Motivated buyers have been anxious for months to see the selling season arrive – and those are the buyers you want!
Some day we could see a surge of boomers looking to cash out of their lightly-maintained, long-time residences. With loads of equity, they (or their heirs) could undercut you on price for a quick sale.
Historically, demand has been known to turn on a dime. Currently there is little evidence of that, but if the season gets off to a slow start, the psychological ‘animal spirits’ could recede quickly – especially on price.
San Diego weather allows buyers to hit the street earlier.
This video has been viewed 500,000+ times in one day! Thanks daytrip!
If you’ve got a small space, you’ll probably find some ingenious way to fit more stuff than should be possible. Necessity, as they say, is the mother of invention. But whatever your space-saving solution is, it probably doesn’t compare to all the methods used by Youtuber 007craft, who spent two months living in a small storage unit, unbeknownst to management of course.
007craft’s storage unit measures only 6x4x10, yet he managed to fit a bed, a large TV and surround sound speaker system, and an entire kitchen, complete with a homemade sink. He also has a number of storage racks on all the walls and even the ceiling, where he keeps everything he doesn’t use regularly.
Can we get a feel for the action yet? Here’s just a small sample of what’s happening so far – a comparison to previous years of how many new listings have hit the MLS (most are re-freshed):
NSDCC New Listings, First Ten Days
Year
Number of New Listings
Median List Price
Median Sales Price
2013
129
$975,000
$865,000
2014
135
$1,375,000
$1,180,000
2015
138
$1,249,000
$1,100,000
2016
134
$1,666,950
$1,237,000
2017
124
$1,557,500
?
No flood of new listings yet, though there will be some late-reporters that should bring the 2017 total into the 130s. But so far, it looks like more of the same conditions – tight inventory!
The median sales price is what happened eventually to these early listings. Look at the gaps between the MLP and the MSP – you can see how optimistic sellers come out, only to find that buyers didn’t go for it in the new year either.
The home-improvement videos on YouTube are causing more people to do their own repairs around the house – great! Personally, I like to stick to the minor fixes – let the pros help you with anything major.
