For most of the past year, promoting real estate as a good buy has been challenging. We have been fielding questions about housing prices, interest rates, and when the crash is coming. Interest rates are high, and housing prices are even higher. Those two conditions force the conversation about long-term expectations vs. short-term expectations. We started pushing our buyers and sellers to think beyond a year and think the longer term of 5-7 years and, in some cases, ten years ahead. Long-term expectations are a better judge of real estate because the pandemic will be an outlier that we discuss in the future. It is not normal for homes to appreciate $100k in a year, and we should instead consider long-term wealth creation when it comes to real estate.
Thinking long-term does not mean that a good deal cannot be found now. Buyers and sellers are coming together to make deals that work for both parties. Recently, we have noticed fewer one-sided deals. Sellers have come back down to earth about pricing their homes, and buyers are being reasonable about repairs and credit requests. Since the beginning of 2023, I have experienced a great market with buyers, sellers, and agents. Our current market will hopefully continue as a mutually beneficial experience for all parties. Now for some proof!
Coming into January 2023, we had three listings on the market. And before January ended, we have two listings in escrow and are negotiating offers on the third. These properties are in different parts of Sacramento at different prices with different buyers. Even with so many differences, the experiences for all parties have been relatively the same - overall happiness about the experience. We think this is because of the time available for buyers and sellers to consider what offers to make and to examine the best offer to take.
Property 1: This property was on the market for over 100 days before we received any offers. But once we did receive offers, we received multiple offers! This house was an inherited house by kids not local to Sacramento. The home is outdated and needs some rehab to bring it up to modern standards. But like many inherited houses, the family is usually more interested in getting the property cleaned and listed for sale as quickly as possible, which is the case with this property. So, we have an outdated property that needs updates all around but is in good standing. When it comes to homes that need work, buyers are worried about keeping extra cash available to perform upgrades. So, as agents for the sellers, we suggested listing at market value with a credit for the buyers. The buyers could use this credit to lower their interest rate or put it toward closing costs. Whichever they deemed better for their circumstance. Even though it took some time to get this property into a contract, the buyers and sellers are happy with the deal. The buyers get a great home with credit to help them make the house their own. And our sellers are getting the closure they need to move on from their family home.
Property 2: This property is the opposite of property 1. This property is remodeled property with a pool and double lot. This property was one of the first hot homes in its area since the pandemic. Open houses were packed with weekends full of serious guests asking serious questions about the property. We had multiple offers in a matter of weeks, all fighting for the property. My sellers were able to negotiate for everything they needed to make a move to their next property. As an appreciation to the buyers for their offer, my sellers are completing repairs that concern them without the buyers formally requesting them. As agents, we have worked together to make our clients happy and create an escrow that our clients will remember as an extraordinary experience. Because at the end of the day, customer service/care will trump everything else.
Three different properties, three different areas, multiple offers, and happy clients. This is what we strive for with every deal that we do.
Buyers: Enter the market with an open mind. No need to make crazy lowball offers that go nowhere just because your uncle told you that you could. Demanding crazy repairs when inspection reports don't justify the cost won't get you anywhere. But if you approach sellers with respect and understanding, that will yield a better result every time. There is no need for one side to be in the driver's seat and the other side to accept their fate. This is a time of negotiation, and the opportunity for good deals is out there.
Sellers: Be patient. The market is moving slower than it was during the pandemic. But that doesn't mean someone won't buy your house. Be prepared for multiple weeks of open houses and weekly showings. When the offers come, be willing to hear them out. No matter how "bad" they may seem. Be quick on pricing decisions, or you will sit on the market with no action. To get the best deal, both sides will need to work together.
This market is a fun one. Now might be the right time to think about buying or selling. There is time to make decisions as a buyer. It is taking longer to sell, but buyers that make offers tend to be more serious and willing to stick out a purchase agreement. They have taken the time to look at the property and consider their lives in the homes. The time investment from buyers is huge, and it goes a long way to keeping them engaged in a contract.