What I'm Seeing. Columbus,OH
The market is constantly changing week to week.
Home sales are few and sporadic…and it is almost impossible for those on the outside to see the ebbs and flows of buyer traffic, micro price swings, and how mortgage rates impact the amount of showings and the offers that result.??
On the surface it looks like a straight line on the Zillow graph…it's different in the trenches under the surface.?
The following are some observations of the market in the last month:
Pricing?
Price the home at the lower to mid range of its value!? Why? It's an insurance policy.??
This offers the highest chance of the seller getting multiple offers which often not only result in the highest price but the ability to negotiate key terms that help you KEEP your price: “no remedy”/ “appraisal contingency waivers”/”possession” needs.
In this market, it's not just about the price you can negotiate upfront, just as important is the price you end up with.??
Finicky buyers are driving a harder bargain after the initial sale than they once were and flexing the leverage that they will send you “back on the market” as damaged goods with a crummy inspection report in hand. ? What is your best defense? ? A “backup contract” from buyer #2.
Inspection/remedy
In 2021 almost every deal was “as-is”...and it stayed that way... buyers didn’t go back on their commitment. ? In 2024 most deals are “as-is” except 50% don’t end up that way.? This is one reason why experienced agents prefer to work with experienced agents who do what they say they are going to do instead of the “fly by night newbie” with no reputation to soil.? With the higher interest rates buyers feel rightfully poor.? They see every little repair as a straw that breaks the camel's back.? All you can do is be ready for it with insurance(see above).
It pays more than ever to make any repairs prior to listing.?
Appraisal-lack of timely data available
With the limited home sales, appraisers are having a hard time finding past sales to use as comps.? If the listing is superior to most of the comps it makes it even more difficult to justify your premium value.??
Low appraisals are killing deals and/or costing sellers $.
Sometimes appraisers are brilliant…but sometimes are not.? Sometimes they just got on the right call list, received an order, and drove an hour away to Dublin to earn a paycheck…? They don’t know the nuances of the neighborhood other than the data the computer spits out.? It's more important than ever today to meet the appraiser, shake their hand, give them the data that they need to know, and most importantly do it with credibility and using a financial analysis.? Gotta speak their language.? These meetings can preserve tens of thousands of dollars in sellers' hard negotiated profits.?
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Negotiation
Prior to selling most sellers don’t appreciate the roller coaster ride that is negotiating the best price and terms of a home sale.? They think they know, but they have no idea.? One exhausted seller asked me the other day, 'how do you do this everyday?’.? Yep, that's what we do.? Something inside us tells us to get out of bed and run toward the pain, the drama, and challenge everyday.? Built differently.? I guess that's why 90% don’t last a year.??
From the outside it looks so easy.? List a house for $500, an organized line of buyers drops great offers on your desk and you sell it in a day for $550. ? The reality is most buyers don’t give you a pile of offers at $500+.? They give you an offer on Monday for $475, an offer Wednesday for $450, and an offer on Friday for $490.? They all want an answer right now.? What do you say to them? How do you keep them interested?? How do you know who is fugazi? Each one has 10 different contingencies with varying implications and they all want an answer right now or they are walking away…the work then begins by magically trying to turn those offers into $550 with most of the contingencies eliminated.? Most sellers don’t appreciate the art of the dance or the emotions involved until they are in the eye of the storm.?
Rates popped up again
We thought we had seen the worst and it would only trend down but that darn inflation…They didn't pop a ton, but they are up to 7.5ish%.? When rates tick up we see buyers step back and usually there is a reduction in showings for the following couple weeks.? Buyers often recover from this even if the rates don’t change…it's almost like they just collectively need to digest the new payment/info, remind themselves of their “why”, then get back out there.?
More cash floating around
Most buyers getting their offers accepted today are utilizing higher down payments or even paying all cash more often than they were previously.? Rates were higher last year but I feel like I am seeing this be even more of a thing this year.? If a home attracts 10 buyers, the 2 out of the 10 that are willing to pay the most, often are playing unfairly with a larger stack or family help.? These are the buyers that are keeping the line on the price chart moving up and to the right.?
Luxury
I'm surprised at the amount of cash in the luxury market despite the rates.? It feels like there are more million dollar buyers than last year on the prowl.? We are seeing multiple offers in the 1mill-1.5mill range. Inventory of “existing/non-new construction” million dollar homes is low.? There is a little less demand for new construction in a suburb on the Northern outskirts vs more central neighborhoods..
New Construction
New construction is still humming along, but expensive (next paragraph will tell you why).? I think it just feels expensive because of what you get for the $ now…with the lack of subcontractors in the market, quality seems to have suffered at all price ranges of new construction.? Most builders have banned home inspectors using flashlights in new construction inspections (allows them to see the waves in the drywall).? True story.??
The new construction market under $800k is being driven by “buy downs”? These are mainly publicly traded home builders that also own their own mortgage companies.? The builder offers a large “buy down” on behalf of a buyer to their mortgage company, and voila, a 7% rate turns into a 4.9%.? It's a pretty slick unfair advantage.?
I take the time to write about what I am seeing in the Columbus real estate market every few weeks. This is NOT a templated marketing newsletter…it offers tips/tricks and observations you won’t see in your news feed.
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