In the wake of wildfires, earthquakes, a global pandemic, and unemployment at its lowest rate since 1969, real estate sales are, unquestionably, a bright spot - arguably the brightest spot - in the pandemic-battered U.S. economy.
Pending home sales in August rose 8.8% to 132.8 – a record high – and year-over-year, contract signings rose 24.2%, marking four uninterrupted months of positive contract activity in each of the four major regions.
“Move-in ready homes are drawing multiple offers and selling within 48 hours of listing,” said An Marshall, a career agent with Berkshire Hathaway HomeServices Florida Network Realty in St. Augustine. “It may take a little longer but, in many desirable areas, even homes that need a little TLC are selling at full market value.”
With the supply of homes available for sale at its lowest point in two decades, and mortgage interest rates at historic lows, the dynamic is not surprising. A dearth of inventory to show to clamoring buyers is the biggest hurdle most Realtors® face.
“Many potential sellers are slow to pull the trigger,” Marshall said, “not so much because of health concerns right now, but because they know they will be competing with other buyers to find the right home. They are afraid to list their home because they fear they may not be able to find the place they want to move to.”
Marshall’s strategy in such cases, she said, is to appeal to the homeowners to put their home on the market with a proviso that when it sells, the purchase contract will stipulate that the owners will have a specified number of days to find a suitable home.
With prices rising to reflect demand and lenders scurrying to keep up the pace, there are other stumbling blocks complicating a busy agent’s day.
“I have10 closings in the next four weeks, said top-ranked agent Jeri Green, who specializes in high end homes with Sotheby’s Prominent Properties, Tenafly, N. J. “The pace is exhausting.”
It is also not without hassles.
“Appraisers by and large are keeping up with rising prices,” Green said, “and many buyers know they are overpaying to purchase a particular home. In those cases, we try to make up the difference by asking the seller for more repairs or concessions. But often, we don’t get them because it’s a seller’s market - and if the buyers really want that home, they just go ahead and go into contract knowing they are paying a premium.”
While her buyers, for the most part, are monetarily secure, Green said, many lenders are overly scrutinizing financials, sometimes demanding proof of employment or other documentation even at the point of closing.
It’s an issue Corina Jones runs into frequently.
“It’s nerve-wracking for buyers when the lender pulls their credit again right at the last minute, or holds up a closing while they check to see if the buyer still has a job,” said Jones, broker/owner of Your Home Team in Greenwood, Ind. “I’ve had lenders pull the loan last minute if something doesn’t check out.”
Pre-approvals are a must in today’s market, said Marshall.
“Lenders are backlogged right now, dealing with all the refinancing going on as homeowners take advantage of the low rates,” she said. “So, getting loan approval is more tedious. But buyers who are not pre-approved for a loan simply cannot compete.”
A last-minute disappointment is hard to deal with in any case, said Green.
“Homes listed at under $1 million almost always draw multiple offers,” she said, “and only one will be accepted. Part of my job when my buyers lose out is to keep their spirits up as we look for another home that excites them.”
That’s not always easy in today’s frenzied market - and as buyers and agents contend with tight inventory and cautious lenders, appraisals are a wild card, said Marshall.
“The typical concern is that a home may appraise under the sale price,” she said. “But an appraisal on one home I sold came in the other day at $41,000 over the asking price and $20,000 over the sale price. “It was an oceanfront home, recently renovated, with a wine bar, a cofffe bar, and many fine amenities - but it kind of blew my mind, nevertheless.”
The market is so busy, Marshall said, that people sometimes can’t find movers. “They need to schedule them the minute they go to contract or they risk not being able to find one.”
Realtors need to be at the top of their game in this market, said Jones.
“Negotiations can be critical in competitive situations,” she said. “Agents need to be well-trained and experienced to deal with multiple bids, escalation clauses, inspections and so much more.”
Savvy, well-organized agents, on the other hand, are thriving on the current challenge, tight inventory notwithstanding.
“The truth is,” said Green, “I have a slew of buyers, and not enough houses to put them in.”
