What to expect in today’s residential real estate market
The number one factor home buyers and sellers need to know about today’s market is that it isn’t what it used to be. Buyers may not get their first or second choice. Also, the asking price is usually the starting price.
“There are no deals,” says Mike Cagle, a seasoned FC Tucker realtor. “Forget all the vendor concessions. In fact, sellers have to think about the buyer’s concessions. How much are they willing to pay on the seller’s side to make their offer a little more attractive? This was not heard until last year.
On the other hand, sellers need to be aware of this crazy market. Cagle encourages its sellers to put their homes on the market on a Friday and then head out of town for the weekend simply because the number of listing requests can be overwhelming. He then meets with his clients the following Monday to review the offers received over the weekend – usually 12-15.
Homeowners on a budget, as well as first-time homebuyers with limited funds, are outbid. It used to be that buyers never had to compete with an investor because investors bought bank-owned properties, fixed them, and flipped them. Today, however, many personal residences are being gobbled up by conglomerates, private investors, and real estate investment trusts, who buy these turnkey properties at or above market value to use as rentals.
“It’s really hurting everyday shoppers because they’re not just competing with other shoppers anymore, but also with cash offers,” says Jake Stiles, team lead with Team Stiles at Real Estate Compass. “It’s a tough pill to swallow as a buyer because the average buyer doesn’t have $300,000 in cash. Of course, if you’re a seller, that’s great.
Stiles reports that his team is seeing a 20% year-over-year appreciation in select locations in Indiana.
“Our homes have been so cheap for so long that investor money is driving up prices, and so is the lack of inventory,” Stiles says. “I think it’s a market correction. Now this is where it should have been.
He believes that once this is fixed, we are not going to see much depreciation, if at all. He also thinks that over the next six months we will see some easing in the market due to lenders actively working on foreclosure properties which they have not been able to do for some time. . This was lifted last year, so some of these properties will likely come on the market, which will help with inventory.
Cagle insists that finding a home is not a hopeless endeavor. Buyers need to understand, however, that they won’t get everything they want in a home.
“They won’t find the perfect home,” Cagle says. “What they buy may need an update that they will have to undertake themselves.”
In the “good old days,” so to speak, if a seller wanted a chance to sell their home quickly — or not at all — it was wise to tackle a few renovations. Today’s market, however, is another story.
“Now it’s like, clean the house and you’ll get top dollar,” Stiles says.
The first impression, however, is crucial. If the doorknobs are dirty, the carpeting is worn, the windows are stained, and there’s thick dust on the window sills and baseboards, buyers will be put off.
“It all depends on the mental game we’re trying to prepare our sales people for,” Stiles explains. “If you don’t think selling is psychological, you’re wrong.”
However, it doesn’t hurt to pay attention to the little things, like adding hardware to kitchen cabinets. If a room is dark, hang lamps from the ceiling to make it brighter. Don’t neglect the outdoors. After all, it’s the first thing potential buyers see, so lay down fresh mulch and plant flowers.
“The phrase ‘You don’t get a second chance to make a first impression’ is true,” says Cagle. “If the front door needs painting, if there are weeds in the yard, or if the mailbox is peeling, you’re already setting a negative tone.”
While renovations aren’t necessary on their own, some upgrades can still help you earn a little more profit. It’s probably best to focus on flooring, and the current trend is to lay new luxury vinyl planks in the great room, kitchen, and dining room. Cagle had a client who had been putting off updating for years. Cagle told him that in its current state the property was worth $150,000, but if he installed laminate flooring throughout the main level, put new carpet in the bedrooms and added a new coat of paint to the walls, the property would sell for $200,000. or more.
“He spent $20,000 and he will earn another $30,000,” Cagle says. “It’s worth making these changes.”
The best thing to do, whether you’re buying or selling, is to talk to an experienced real estate agent.
“This business seems easy because experienced professionals make it easy,” says Cagle. Scouring the internet, however, is not the way to educate yourself. Cagle was once chatting with a doctor who asked him what he did for a living. When he told her, she said, “Oh, I bet you like Zillow!”
Cagle replied, “As much as you love WebMD.”
She chuckled. Point taken.
If you are looking to buy, it is a good idea to get a representative who is knowledgeable in your market. If you’re a seller, it’s a good idea to interview multiple agents. Stiles also recommends refraining from hiring the first person you interview or just going with someone because they’re friendly.
“Just because you go to church with someone doesn’t mean they’re competent,” Stiles says. “Look at their track record. Do they sell homes in your area? How many houses have they sold? Do you want to hire someone who has sold two houses in a year or someone who has sold 100? This is a business decision that will make or break your money, so it’s best to hire someone who is more of a financial advisor than a friend.
To contact Jake Stiles of Team Stiles at Compass Realty, call 317-883-9461. To contact FC Tucker’s Mike Cagle, call 317-888-3311.