October 2019 Market Update

It is hard to believe we are entering the 4th Quarter of 2019 already.

It will be interesting to see what the vision of the real estate market will be in 2020. Right now, the real estate market is very dynamic and very hyperlocal. We see inventory levels remaining low relative to previous years. We currently have a total of 4,122 houses for sale in Northern Virginia – 33% fewer homes for sale through September this year versus last year. Homes priced below $350,000 represent only 719 houses with only 45 of these are located in Arlington. The Amazon Effect in full force in Arlington. Homes priced between $350,000 and $700,000 make up 1,822 homes of the total inventory numbers, only 46 of these are located in Arlington. Lastly, houses priced above $700,000 make up 1,582 of the houses for sale in the marketplace and there are only 118 in this price range located in Arlington.

As you can see, the market is different in each location, I just picked Arlington as an example.  That does not tell the whole story – prices are up year over year in all of Northern Virginia by 3.6% while in Arlington, they are up 12.4%. Additionally, the median days on market in all of Northern Virginia is 15 days on the market and in Arlington…you guessed it, lower at only 8 days on the market. The market is definitely hot for sellers “if” you price it right and do the right upgrades. Buyers will pay for ready to go houses and will pass on the ones that need work or updating.

This being said, housing prices are up year over year throughout our area – just not substantially. The 3.8% is healthy and sustainable. The issue we are having is sellers are trying to attain 5% per month and therefore the houses are not selling. In today’s market, buyers are being very discerning on prices and are not making offers including low offers. Sellers who overprice their houses or price in “negotiating room” find themselves sitting.

If you are looking to buy or sell in today’s dynamic market, call me today to set up a no-obligation consultation to learn more.

Enjoy the cooler temperatures heading our way! Happy Halloween!

Multiple Offer Strategies In Real Estate: Help For Home Buyers

It is no surprise that we are seeing more and more multiple contract situations.  The perfect storm is in place – interest rates are at 65 year lows, inventory levels are at extremely low levels, and there are buyers anxious to get into houses.  Affordability levels are near all-time highs as well so it only makes sense that buyers are finding themselves competing to get into a home today.

So, the question is how do you win and get the home your client’s desire?

  • Add an escalation clause which allows you to bid up the price above any other offer up to an amount you are comfortable paying.  The escalation amount should be an interesting number like $1,150 as most people just do $500 or $1,000 – make your offer stand out.
  • Increase your earnest money deposit to show your interest in purchasing the house.  If your down payment is 20%, make your deposit 10%.  If you are doing FHA, have your deposit equal your down payment of 3.5%.  You are going to be putting the money down anyway, why not do this and attract more attention to your offer?Multiple Contract Strategies
  • Have a very short time frame on your home inspection contingency and radon contingency if you choose to have them.  Also, consider doing the inspection contingencies for informational purposes only just leaving yourself the opportunity to void if you find something so egregious or beyond what you expected.  If you and your agent are confident in the home’s condition, you may want to consider eliminating these contingencies but be extremely cautious when not exercising these contingencies.
  • Have a quick settlement date – Ashley Smith with Atlantic Coast Mortgage can close a loan in just 8 days if she has a complete loan application from her clients.
  • Additionally, encourage your loan officer to be proactive and call the listing agent and explain the financial arrangements and status of the loan.  Pat Cunningham of Home Savings and Trust was one of the first lenders to mention he was doing this for his clients.
  • Allow the seller to rent back after closing giving them flexibility on when they need to move or to give them time to find a home.
  • Put in a home of choice contingency for the sellers if they have not found a home yet – make the contingency for an extended period of time so they have the opportunity to find the house they really want.
  • If you are so bold, you can have the clients waive the appraisal contingency.  In order to do this, you need to work in conjunction with your lender and see if they can get a quick turnaround on the appraisal.  If so, have the appraisal done in concert with the home inspection contingency and if it doesn’t appraise, you can void based upon the home inspection or on the HOA/condo documents.  Not one of my favorite suggestions but it is a strategy you can undertake to help your contract win.  Also, if your lender can get a quick turnaround, make the appraisal contingency 5 or 7 days.
  • If you are dealing with a home owner and not a bank or investor, have your clients write a letter along with photos explaining why the house is so important to them and the trials and tribulations of their home buying experience.  It can sometimes help to pull on the heart strings of the owners.
  • You can explain to the listing agent, the highest contract isn’t always the best contract.  You need to have the right people in place to consummate the transaction not just someone willing to throw a high number just to get the house to only experience remorse later and back out of the contract.

These tips will help you win more contracts.  Consult with the clients and make sure they are comfortable with your recommendations prior to implementing them so they fully understand the repercussions of their actions.  Get it?  Got it?  Good!

Now, go sell something!

Negotiation tips and tactics

There are three important areas for Realtors to be successful in to survive in any market.  First and foremost is lead generation.  Without lead generation, you can have all the skills, knowledge and ability to be a success but without clients, you won’t make a penny in the business.  The next one is being solution oriented and solving problems for your clients.  When you resolve issues, you become a valuable resource to your clients and will receive leads on an ongoing basis.  And the third key area is negotiation and that is what we are going to cover in this blog today.

Let’s review some of the important pieces of the puzzle to negotiating successfully.  To know where we are going we must know where we are coming from.  First, start by analyzing previous negotiations.  What went well, what didn’t & why.  What did you learn?  What did your clients learn?  Review this with your new clients to set expectations of success in their transaction.  By having the proper expectations, your road to a successful end is much more likely to happen.

Next, assess your client’s situation prior to entering the negotiations.  Do your research.  Ask lots of questions because information is critical to successful negotiations.  Who is involved?  What is your strategy?  Where will you give concessions?  What are your best alternatives?  Where do you want to end up?  Also, through your research determine, do we want to work with them?  What is the motivation of the other side?  When do they need to move and why?  Who is the other party involved in the transaction and what is their background?  Discuss what your options are with your client?  Determine the “what if’s”.  Then listen and take notes. 

Also, remember, it is just as important to know what your side wants as much as it is to know what the other side wants.  Do you know their position as well as your own?  What are their objectives?  How do you get the information?  Ask the agent or lender about the client and their situation.  Also, check them out on the internet, Google, social media outlets, DPOR and public records are just a few places to begin.

Who and how do you control the negotiations?  The person who asks the most questions and gathers the most information and can build the bridge to a successful end.  Plan your questions according to the situation so you can create win-win negotiations.  Let’s review how you create win-win negotiations.  Find common ground and build upon it to get the common goal of both parties.  Discuss all options available to both sides to get resolution.  If you come to a stall in the negotiations review how close you are to the final outcome, review how you got how you got where you are and why it is important complete the negotiations.  Use your notes and remind the other side it is better to negotiate than not negotiate to get resolution on the issue creating the stall.  Convey flexibility in one area over another.  Ask other side to restate their position, gain understanding and restate your position as well.  If the other side asks for a concession, say “yes if”.  Focus on the issues at hand and not positions and be tough on the issues but not the people involved – separate them.  Always seek to understand and be understood.  Remind the other side of the mutual benefits of resolving the issue.  Use we – not us and them.  Ask the other side, “What would you do?”  Never narrow it down to one issue – keep the discussions open and fluid.

What to avoid:  getting confrontational; giving up walk away power or getting to the point of no return;  giving up control; negotiating against yourself;  improper use of concessions;  assuming the other side wants the same thing as you; missing out on clues (good cop bad cop, flinching, stalling, red herrings, nibbling, higher authority, hot potato, any others, etc.); getting to bottom line too quickly; negotiating with the wrong party; negotiating price too soon and too quickly; not explaining your value – up front;

In addition to what we mentioned, we also need to strive for in negotiations are to keep an open mind – think outside the box.  Focus on what’s right not who’s right – it’s not personal.  If negotiations boil down to one issue – it’s a win lose…stay focused on give and take scenarios.  Answer questions with questions to determine what they really want.  Don’t pre-negotiate with yourself and don’t answer questions that weren’t asked.  Keep your ego in check.  You have more power than you think you have in the negotiations.  Put things in writing so the issues are clear.  No is just an objection that you need more clarification on – ask why they are saying no.  Start high or low depending upon the situation you are encountering.  List your assumptions on what will happen and the scenarios that will happen as a result of each option.  Build a relationship prior to beginning negotiations with the other side – by having a relationship, the transaction will go more smoothly.  Communication is the key – ask permission to ask questions.  Never say yes to the first offer and know the reason why.  Give in diminishing chunks.  Always give the impression you have other alternatives and this isn’t the only choice to gain leverage.  Keep your client’s information confidential.  Realize your strengths in your situation.  After making offer, remain silent.

Practice negotiations all the time and in different situations.  Also, it is also critical to rehearse with an accountability partner prior to presenting your offer to the other side as you need to be sharp with your presentation skills.

By exercising and utilizing these tips and tactics, you will have great success in real estate.  Get it?  Got it?  Good!