So we hear from almost all media outlets that housing market is shifting. Only a blind or deaf could miss that part by now. Some realtors are panicking, especially new ones who got into business for easy money, and some are expecting it and are getting ready. So what is really going on?
For the last several years, when sellers in Seattle were listing their homes for sale, multiple offers, escalation clauses, waivers of contingencies were more of a norm than an exception. Back then when a buyer saw a home on Zilow or Redfin website, they would have to send an offer or get to the house as soon as practically possible to see it. Offers had to be written sometimes on the spot and very aggressive ones. Offer review dates were dreaded by the buyers, as it was dramatic and felt like a lottery. Crazy, right? Well, it all stopped in May of 2018. Suddenly. The same way as it all started.
Suddenly the buyers stopped throwing cash at sellers. They took a breather and juts stayed put for a minute. Sellers who thought that their homes would fly off the shelves the minute they hit the market, were plunged in a cold pit.
Average days on the market increased from usual 2-3 (until offer review date usually), to healthy 20-30 or more. Open houses traffic decreased, lonely Realtors at open houses are gold to see any face just to strike up a conversation, sellers are pissed and confused. Throwing a house on MLS does not do the trick of a quick sale anymore and making the listing agent look like a rock star. These days are gone! Buyers not only don’t overpay for a chance to “win” a house in a bidding war, but actually getting a discount now and are able to engage in a reasonable negotiations with the sellers.
Over-leveraged flippers are getting really hurt. Wanna be investors who took out hard money loans (usually at 12% per year) with hopes of flipping the house and did not do their math correctly, are hurting bad. Ouch! Their flipped properties are slowly turning into flops with points that they pay to the lender on a hard money loan and long days on the market. Every time they are forced to drop a price, it’s like taking out a finger. Painful!!
So, what is really happening? Is it the market crash? Is it 2008 all over again? Bubble bursting? Not so fast.
Here is what is happening: the market is correcting itself. The inventory was added to the pool, interest rates went up and home prices simply became no-sustainable by the current salaries. The buyers have more choices now and there is so much house they can afford.
So, what can sellers do to sell in this market and not get hurt? Answer is simple: Price according to comps and listen to your agent. Do not over-price in fear of leaving money on the table as you will lose more if the property sits on the market. Hire an experienced sales team to sell your house. Work with a team, not solo agents. Why? Because you need somebody who is a full time agent, not who is buy with a real job from 9-5 and attends to your listing after work. Make sure your agent knows about the market conditions and monitors every sold comp and new active listings in the area. You gotta know who is your competition.
It is not the market crash, it is not a new bubble burst, it is simply a correction and a shift.