The number-one factor homebuyers and sellers need to know about the current market is that it is not what it used to be. Buyers may not get their first or second choice. Also, the asking price is typically the starting price.
“There are no deals,” says Mike Cagle, a seasoned realtor with F.C. Tucker. “Forget about any seller concessions. In fact, sellers have to think about buyer concessions. How much are they willing to pay on the seller’s side to make their offer a little more enticing? This has not been heard of until last year.”
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On the flip side, sellers need to be informed of this crazy market. Cagle encourages his sellers to put their house on the market, like on sites such as Sell My House Fast In Las Vegas, on a Friday and then go out of town for the weekend simply because the number of showing requests can be overwhelming. He then meets with his clients on the following Monday to review the offers that came in over the weekend – usually 12 to 15.
Homeowners on a budget, as well as first-time homebuyers with limited funds, are being outbid. It used to be that buyers never had to compete with an investor because investors purchased bank-owned properties, which they would fix up and flip. Now, however, a lot of personal residences are getting 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 in order to invest in high return properties.
“That’s really hurting everyday buyers because now they’re not only competing with other buyers but also with cash offers,” says Jake Stiles, team lead with Team Stiles at Compass Realty. “That’s a hard pill to swallow as a buyer because the average buyer doesn’t have $300,000 in cash. Of course, if you’re a seller it’s great.”
Stiles reports that his team is seeing a 20% appreciation year-over-year in certain spots of Indiana.
“Our homes have been so cheap for so long that investor money is driving up prices, as is lack of inventory,” Stiles says. “I think it’s a market correction. Now it’s where it should have been.”
He believes that once this gets corrected, we’re not going to see much depreciation, if any at all. He also believes that in the next six months we’ll see a bit of market easing due to the fact that lenders are actively working on foreclosure properties, which they weren’t able to do for some time. That was lifted last year, so some of those properties will likely hit the market, which will help with inventory.
Cagle insists that finding a home is not a hopeless endeavor. Buyers do, however, need to come to grips with the fact that they won’t get everything they want in a home.
“They’re not going to find the perfect house,” Cagle says. “What they buy may need some updating that they’ll have to undertake on their own.”
In the “old days,” as it were, if a seller wanted to have a chance at selling their house quickly – or at all – they were wise to tackle some renovations. Today’s market, however, is a different story.
“Now it’s like, clean the house and you’ll get top dollar,” Stiles says.
The first impression, though, is crucial. If the doorknobs are dirty, the carpet is worn, the windows are smudged and there’s deep dust on the windowsills and baseboards, buyers will be turned off.
“It’s all about the mental game we try to prepare our sellers for,” Stiles says. “If you don’t think that selling is psychological, you’re wrong.”
It doesn’t hurt, however, to pay attention to the little things, like adding hardware to kitchen cabinets. If a room is dim, install some overhead canned lights to make it brighter. Don’t neglect the exterior. After all, it’s the first thing potential buyers see, so lay down fresh mulch and plant some flowers.
“The phrase ‘You don’t get a second chance to make a first impression’ is true,” Cagle says. “If the front door needs painted, if there are weeds in the yard or if the mailbox is chipping, you’re setting a negative tone already.”
While renovations aren’t required per se, doing some upgrades can still help you net a little more profit. It’s probably best to concentrate on flooring, and the trend right now is putting down new luxury vinyl plank in the great room, kitchen and dining room. Cagle had a client who had deferred updating for years. Cagle told him that in its current condition, the property was worth $150,000, but if he installed laminate flooring throughout the main level, put down new carpet in the bedrooms and added a fresh coat of paint to the walls, the property would sell for $200,000 or more.
“He spent $20,000 and he’ll net an additional $30,000,” Cagle says. “It’s worth making those changes.”
The best thing to do, whether you’re buying or selling, is to talk to a seasoned real estate agent.
“This business appears to look easy because the experienced professionals make it look easy,” Cagle says. 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 responded, “As much as you like WebMD.”
She chuckled. Point taken.
If you’re looking to buy, it’s a good idea to get a representative who is competent in your market. If you’re a seller, it’s smart to interview multiple agents. Stiles also recommends refraining from hiring the first person you interview or simply going with someone because they’re friendly.
“Just because you go to church with someone doesn’t make them competent,” Stiles says. “Look at their track record. Are they selling homes in your area? How many homes did they sell? Do you want to hire someone who has sold two homes in a year or someone who sold 100? This is a business decision that’s going to make or break your money so it’s better 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 Mike Cagle of F.C. Tucker, call 317-888-3311.