Real Estate – Selling and Selecting
Who is being impacted most by the rise of interest rates?
There is no demographic of buyer that has been more affected by the national rate hikes than this group. It is unfortunate “collateral damage” to a large group of young-adults that are being all but forced into renting for the foreseeable future.
On the seller-side of things, these rate hikes have brought down their values. However, the reduced prices are not enough to off-set the monthly costs for young buyers. To compound this, many sellers of this product-type purchased during a lower rate environment. Leading them them to a “hold” position as they do not want to take a loss on sale. These seller’s monthly payments, even if they overpaid on purchase, are being covered by current rent values. We are seeing more 1 bedrooms (that would historically have been up for sale to take advantage of value-appreciation + capital gains exemption) be converted to rentals.
There is a good chance the above leads to higher rents in 2024. The backlog of would-be buyers waiting for rates to come down may start opting for a higher-quality apartment than a condo purchase. Leading to increased demand for rentals, pushing prices up.
If you own a home, then you know issues with inevitably arise. This is an unavoidable consequence that comes with the territory of a “physical asset”. If you are unprepared, or do not have the right resources/vendors when an issue arises, it will compound the problem.
For example, losing heat in the winter = NOT FUN. But, losing heat in the winter + nobody will answer your call for help = EVEN LESS FUN. Having a trusted plumber can eliminate tremendous stress and headache during times like these. Not only will this plumber answer your call and complete the job in a timely manner, they will (usually) not overcharge you. I write “usually” this way because the cost of trade-work is at an all time high… so these days even the current market price can feel like you are being taken advantage of. One thing I will always suggest –> negotiate, negotiate, negotiate. Often times a vendor will reduce price if you ask the right way (hint: nicely!).
On the Real Estate side, this type of trusted network is something I provide to all my clients whether you bought/sold last week or 10 years ago. Having vetted dozens of vendors in each trade through my 20+ years in real estate, I have intimate knowledge of who is reliable. When a situation arises for a client, my first step is to always ask questions to understand the issue. Then, if any basic troubleshooting can be applied I make suggestions. If this does not work or it is not a potentially “simple fix”, then I provide my vendor contact. I also notify the vendor with name of the client reaching out and outline of issue. This helps them be prepared and ready to respond. *Note: I never accept kick-backs from any vendors I recommend. All I ask is they do a good job and charge fair market.*
Long and Short: whether it be a plumber, electrician, handyman, roofer, painter, flooring; etc – having a rolodex of people you can rely on will be a tremendous relief when in a pinch.
If you are considering selling your property, PLEASE research who is the best fit to represent you. There have never been more options to choose from on an agent front, so you need to be more careful than ever. Part of the issue with real estate as a whole is the very low barrier to entry. The simplicity of getting a license makes it really difficult to determine who is qualified VS. who simply “looks the part”. Real estate is not an overly complicated business, but small mistakes can lead to tens-of-thousands in dollars left on the table, if not more. Remember: real estate is most often the largest investment someone owns… so be sure to treat it that way!
Here are a few things to think about when interviewing:
- Does the agent know my market? Often sellers know more about the market than the agent they hire! The agent should be a wealth of knowledge/insight on the area.
- Do they have knowledge of construction/property maintenance? Questions always come up from buyers about the property (material quality, age/type of mechanicals, flooring, electrical, windows, roof, appliances, foundation, water entry; etc). An agent being able to succinctly answer questions often leads to a buyer waiving a home inspection or, at the very least, a higher level of comfort for the buyer.
- Do they know the points of differentiation from your property and others that have sold? Buyers often know the market really well, especially these days with sites like zillow, redfin etc that are full of information. If the agent isn’t familiar with the other sales in area they can’t effectively promote your home.
- Do they have an eye for decor and property prep? Often agents leave prep to the seller without guidance. This leads to the property selling for less than it could/should. If the home’s first impression online isn’t great there is a good chance buyers will not take the time out of their day to view in person.
- Review the agents past listings to see the quality presented! History repeats itself, and the internet is forever. 🙂
- Ask agent for their Average Days on Market AND Average Sale Price vs Initial List Price. These two measurable’s will give you historical representation of what to expect. This will also help you understand if the price agent suggests is accurate or inflated to simply “get the listing”; which often leads to price reductions or sale well below original price.
- Ask agent if they pay for extra marketing materials such as 3d Tours, floorplans, mailers, online ads; etc. Your agent should be putting you in best position possible, on all fronts.
- Is the agent your primary point of representation? Or, are they just the name on contract? With the growth of “team” models the last few years, you need to be really careful here. Often a seller may think an agent is representing them when in reality they are having an inexperienced team member do the leg-work/representation. *Of course an agent can’t be everywhere at once, so there are times a member or assistant hosts an open house, covers a showing; etc. But this should not be the norm if you are paying someone to represent you (imo).*
- Don’t feel pressured! If an agent approaches you aggressively question their motivation. Remember: they don’t get paid until a deal closes! So, unless it is coming from someone you genuinely trust, always question the advice you are getting.