A Shift in The Market — 15 Essentials Sellers and Buyers Need to Know

Shift is the new real estate du jour word of the day. I guess it sounds better than market change. The same way “price adjustment” sounds better than “price reduction”.

Whatever the case, there is a shift or change in the market. PGA National is a good market to analyze because there are 43 subdivisions and 4,963 homes. Inventory has been running at 8–20 since last fall. As of writing this, it’s at 34 homes. That’s OMG until you realize it’s still only .00685%! So, I don’t see it as a reason for buyers to party like this is 2007.

I talked about this happening as early as February (read my February 2022 blog on why market might shift) and again last month, cautioning against sellers not to be lazy. No more trillions of stimulus, inflation, higher rates, less savings, and rising credit card debts are the main reasons why we are seeing some change.

The best illustration I saw on interest rates was the difference between a 3.00% interest rate on January 1, 2022, and 5.25% rate now. At 3.00%, a $1,686.42 payment including P&I with $100,000 down affords you a $500,000 home. Now it affords that same buyer a $405,000 maximum payment. That is20% less home! That is going to take away a lot of bidders.

However, the market will remain a sellers’ market and still extreme for the cherry inventory because the supply problem is extreme, and it won’t be replaced anytime soon. Especially in our area where the pioneer stage of the market is over. It just appears it will be a softer local marketplace. Buyers, Sellers, and Realtors are going to have to adjust now.

(Courtesy of Ryan Brown at Cross Country Mortgage — W CrossCountryPalmBeach.com E ryand.brown@myccmortgage.com)

Here are 15 essential tips that you need to know if buying or selling.

Sellers

1. Get a Written Guarantee. Interview the Realtor. You can’t be as lax. At ECHO Fine Properties, we put everything in writing and guarantee it. Our organization is set up for it because we don’t rely on outside contractors and ECHO pays for all the marketing instead of the agent. Are you getting a Matterport which is going to increase the amount of looks? Are you doing video? Night shots? Is there a true media department? Is the organization large enough? Check out our 57 Promise Guarantee in Writing
2. Staging ads lot of value. Sellers have been getting away with not staging and need to get back to it if they want top dollar and quicker sales. Sellers Guide and Staging Advice
3. Pre-inspection Why to do a pre-inspection?
4. Price properly. Get a range and price it properly. The 25–50–100 Rule of Searching is something you must keep in mind. We are still seeing full price offers and bidding wars going over ask, but pricing depends on your individual situation and carrying cost. Be aware of the seasonality.
5. Give access. Nothing is worse than a Seller who makes it difficult to show.
6. Listen to Feedback.
7. Be cautious of being too difficult in negotiations. You don’t have to get every penny out of someone if it’s a good deal. You don’t want a buyer to say, “it’s not meant to be.” If the negotiations stall and you are going to call your Realtor a week later to see if the Buyer is still around, perhaps you should not push uber aggressively.
8. Be flexible. If there is a reasonable request for repairs, you might have to bend a little and not be as aggressive as you’ve been able to be.
9. Updated Pre-approvals. Rates are changing daily, and a pre-approval done a week ago might not be valid. Make certain it’s updated and valid. I’d recommend having mortgage approvals done within 15 days. That will only happen with a company that does their own underwriting. Be wary of national big companies. Have your Realtor talk directly with the mortgage broker.
10. Get a real valuation and not just a computer-generated one. Why Zestimate’s are not the way to get a true appraisal. We are boots on the ground locally and will get you a much better range of what your home is really worth.

Buyers

1. Temper expectations. There are not going to be bargain sales, but the power in some cases will not be so extreme. If it’s “the house” and it’s priced properly, go full bore and pay sticker.
2. Summer is the best time to shop. The snowbirds and seasonal renters are gone. Summer vacation is here. That means there are less bidders to compete with. Understand seasonality. Take advantage of it.
3. Be careful of waiving inspections. I’ve seen people do this and unless it’s a remodel, be careful of doing so as you should know what you are getting into. Buyer Beware.
4. Ugly Homes will have the best values. The homes that need more work and have inferior locations will be the ones where inventory typically builds up.
5. Updated Pre-approvals. Rates are changing daily and a pre-approval done a week ago might not be valid. Update it and have your mortgage broker talk to the other agent. Ryan Brown of Cross Country Mortgage does this for us all the time.