February 2022 | Note from Jim
Busy Pricing Looking Older
This month: on busyness, pricing, looking around where you might live, and older houses.
And a reminder to please send this to a friend who might like it, and to unsubscribe if you don’t like it.
Clients on my Listings
I was showing one of my listings a few years ago to my buyer clients, with whom I’d worked for months and we hadn’t found the right house. The right house came on the market, and it happened to be my listing. This happens; how we deal with it is important to ensuring representation, and that trust is maintained.
They were my clients, but it was my listing. They loved it. One of them kept saying how much they loved it; I knew this, and still tried to get them to stop saying how much they liked it. We all knew they were going to make an offer, and that I couldn’t write it, but I still asked them to keep the comments between themselves, even though we all knew that they loved the house.
I can’t write that offer, because I won’t do single agent dual agency. They accepted my recommendation to be represented by a colleague, bought the house, and are still happily living there.
It’s inevitable that productive agents will face this; how we deal with it - honestly, transparently, fairly - is important.
Two Agents, Two Responses
Behavior in today’s market will help define the next market.
I had a listing recently that went under contract with multiple offers. I called each agent and had conversations with them; it was worth the time spent.
Recently, I represented buyers and the agent texted that we’d lost. I asked for the agent to have the sellers write “rejected” on the offer and send it back. I never heard from the agent again other than she was too busy to do that.
On another house, I received the following email from another agent in response to my clients’ losing offer to purchase:
Thank you for presenting your client's offer on (this house). We ended up with 13 impressive offers making this an extremely difficult decision. My clients chose an offer that included the following elements that will make the contract-to-close period more comfortable for them:
Above List Price offer
Appraisal Gap Clause
Waived Home Inspection
Most of the offers included those elements to be honest. On behalf of my clients, thank you for showing their home and presenting such strong offers.
Damn, this was helpful! When I represent buyers, I try to learn what we could have done to make our offer stronger. When I represent sellers, I try to call every losing agent to have a conversation with them and apologize and commiserate.
When I asked the agent for permission to share her email, she responded, “Absolutely! Just trying to show some grace in this cut throat market, tough times!”
I shared the email with a friend and colleague and he said, “Great note; she needs to be a Nester.” She already is; and I’m proud of our firm.
Or, the two weekends of disappointment theory.
106 resale homes were listed in January 2022 in Charlottesville and Albemarle. 71* of those went under contract. 92 went under contract by 2/08/2022 (when I started this note) and 101 by 22 February.
If you’re not under contract after the first two weekends, you might be overpriced. In other words, if you’re not under contract after the first two weekends, a price reduction might be in order, because today’s buyers are watching the market in their specific market segment like proverbial hawks. They know the market.
*When I started the note on the 8th, 72 were under contract, so at least one contract fell apart.
More on the market
I do this rarely, but I wrote a lengthy post on my blog about the future of Charlottesville area housing prices; this is part of that post.
The short answer is that Charlottesville real estate tends to hold value over time.
Fundamentals for the market are strong and most forecasts say that we are going to be in this sort of environment for the next 12 to 36 months.
While rates are rising, historically they are extremely low.
I really hope that we don’t see continued appreciation of 10% to 20% value every year as we have been seeing, because that is clearly not sustainable long-term.
Even shorter answer is that we don’t have enough houses on the market to sell, and we have too many buyers. More buyers, less supply, prices are going to be stable or increasing.
It’s an extremely difficult market. The sub $450,000 price point is so challenging for buyers that it’s hard to explain.
My advice to clients who are new to the area is to rent for a year, so you have exposure to more inventory than in a relatively short window, and you’re able to figure out where you want to live, where you don’t want to live, and pounce on the houses that fit most of your needs and some of your wants.
Also, I’ve put together a Twitter list of housing-oriented economists; if you find it useful, cool. If you have any suggestions, I’d welcome them.
Look around; who’s got the trash?
After last month’s note about looking next door, a reader sent this:
Something I've never seen mentioned is that WHEN matters too.
Before making an offer people should drive by at night and on weekend days and nights to see if there is anything going on that wouldn't be apparent during business hours.
How 'bout those 10/10 volume Friday night parties next door to your dream house, featuring your prospective neighbors' teenagers on drums and lead guitar?
That said, I showed a house recently, once in the morning, and once in the afternoon. In the morning, the neighborhood was quiet.
In the afternoon, a big and loud truck pulled into driveway across the street and proceeded to stay running while they popped the hood and revved the engine. At almost the same time two people walked down the street and asked:
“Do you mind if we take your trash?
“Do you mind if we take your trash?”
“No ma’am. I’m just the Realtor and I don’t mind.”
The afternoon was very different than the morning.
Fetishizing Old Houses
The Atlantic had a great story, Stop Fetishizing Old Homes. Many new homes are better than old homes - tighter (this is not always “better”), more energy efficient, more functional layouts, and so much more; it’s a great story.
A reader asked for a consultation to talk about upgrades she could make to her old home. My broad advice was, short of tearing down the house:
Do what will make you happy. That might be adding insulation, sealing gaps, redoing kitchen or bathrooms, upgrading electric and plumbing.
Unless you’re flipping a house, don’t make upgrades specifically for the resale market.
As I tell my clients, if the renovation makes you happier on a day to day basis, it’s probably good for the market, too.
I mentioned last month that I am trying video again. So far, so good, aside from my inability to squeeze what I have to say into about 55 seconds.
What I’m Listening To
What I’m Reading
The 1619 Project, a gift from my wife. The book is astonishing and an absolute must-read, and I’m learning things I’ve never before learned.
Your gas stove is warming the climate — even when it's turned off (just had clients opt for an induction range instead of gas)
"If one person doesn't move, the next person can't move in. What we have, essentially, is growing gridlock in the housing market. People cannot find a place to move to & so they don't move out" - very much this.
Next month: Generational wealth and Realtors’ role, speed and push button real estate, and things you don’t think about when you buy a home … and stay there for 20 years (this has been a big conversation my wife and I have had recently).
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I’m trying to pay more attention to the conversations that matter. Before I know it, the opportunity may be gone, and I’ll never get it back.