That’s a really hard one…
We have gone from a booming housing market of the last 3 years to a stall and some experts are saying an imminent decline. How much of a decline is uncertain at this time but the stall does indicate the height of the precipice and now we wait and see.
I will say that before you get too worried that we are in a region that has been fairly recession proof, case in point being the 2008 real estate market crash where the rest of the nation was experiencing massive foreclosures and the Asheville region had a decline of 2-3% depending upon the county…yes, that’s it!
Today’s article is all about perspective whether you are buying or selling. Sellers have had a really hard time gaining perspective this summer with many making the mistake of going in at last year’s list prices only to have their home sit on the market much longer than expected causing a stigmatized property and incredible frustration.
The fastest selling price point right now is $350,000-500,000 and that range is still experiencing bidding wars and days on market of less than 7. The price range that is feeling the most pressure is the luxury market over $1M with days on market lasting greater than 39 days. While that is not a long time, it has not been the selling scenario that we have come to expect so it has caught sellers unawares. We have also gone from sellers receiving 101-103% of list price at contract to 96-98% of list price and while that might not seem excessive it has opened the door for negotiation in a market where previously sellers made the rules.
Keeping market values high is our month’s supply of homes. Supply is still down because those persons that did purchase at a super low 2.5-4% interest rate are staying put, unwilling to upgrade their home at today’s rates of 7.6%.
And what happens when supply is low and demand is also low? Prices continue to rise.
That brings us to our topic today…accepting reality as it is.
When you go to sell your house, there’s a good chance you’re not going to agree with what a real estate agent suggests for a list price.
It’s one of the most common issues real estate agents deal with, and help homeowners understand.
Problem is… many homeowners don’t necessarily see it as agents trying to help them, so much as convince them to do something they don’t want to do.
Naturally, you want as much as you can get for your home. And, you’ll certainly have your own opinion on the value of your home. You’re totally entitled to your opinion. And it’s totally your call to ignore the agent’s advice, and list your house for as much as you like… if the agent is still willing to work with you.
But if the agent is not willing to, it doesn’t matter, you can always find any number of agents who will put it on the market for as high of a price as you want.
But, it might be the biggest mistake you can make…
And, it could also lose you money, instead of make you money…
There’s lots of ways this happens, but one of the biggest reasons is that the longer you are on the market, the more it impacts how buyers perceive your home, and what it is worth.
And that is hard to hide…
It has become more and more of an issue as so much data and information has become available online. Like, how long a house has been on the market, and how many times it has been listed without selling.
So, the best thing to do, is list your home based upon the current market data… not what you want, wish, or think.
When it comes to pricing your home for sale, Jack Welch, former CEO of General Electric, has such an appropriate quote…
“Face reality as it is, not as it was or as you wish it to be.”
Let’s break that down and apply it to buying a home.
As You Wish It To Be
This is so human, isn’t it? Everybody has things in life they wish were different and better.
C’mon, we all wish we were millionaires. Or even just hundred-thousandaires. But why wish for just hundreds of thousands. Almost everyone wishes beyond that. Why not? It’s a wish. No harm in that. It might even motivate you to do something that gets you there…
Because you can certainly do things to make it your reality. But you’re probably not going to just wish yourself into becoming a millionaire. And you’re probably not going to become a millionaire by simply doing whatever it is you have been doing, which has not gotten you there yet.
But there’s hope. Always hope.
And so it is when many homebuyers are looking for their dream home.
They have certain features that they insist are “must-haves” yet don’t want to accept the reality of the budget they are able to work with nor the price of what that costs in the market that they are searching in. For example, they insist that they must have a 4 bedroom home with at least 2500 sf and a mountain view but their budget is $400K, looking in a market where the average home is a 3 bedroom with 1700 sf and no view for $625,000 (that’s Asheville, by the way). As an agent my job is to manage expectations, but there is only so much that I can do when a buyer insists on comparing our market to the market where they currently live where that 2500 sf home is well within budget reach…minus the view.
Market value is based upon what buyers have paid for similar homes in the are within the last 6 months. So you need to base your expectations against the sold prices of similar homes in your desired neighborhood. If your desires and budget do not align, then you have to make compromises; change the size of the home, change the location, or change the real estate market.
Not As It Was
A lot of times, when they hear how much their home is worth in the current market, say something along the lines of…
“There’s no way my house is only worth $525,000. Back in 2019 my house would have gone for $700,000! And, sure, I know that the market was crazy high back then, and the market is quieting down, but many people are still selling for a high price. So, I can’t see asking anything less than $650,000.”
OK. Deep breath. Phew. Here we go…
Half the time, you can’t even prove that a house would have sold for, say, $700,000 back in 2019. That is often just what an owner personally thought it was worth in their mind. But that was never tested. The chances are… it wasn’t worth that back then. Or ever.
But, let’s just say it was worth $700,000 back in 2019. And now it truly is only worth $525,000. That is the reality. Now. And that is all you can deal with. You can decide not to sell. Wait out the market until prices go up to a point you are happy with.
You cannot, however, turn back time. You can’t price your home based upon such distant history… as it was. It won’t do you any good.
The same goes when you are looking to buy. “Well, I paid $150,000 for my last house in 2000 and it is bigger than this house with more land. Why in the world would I pay $450,000 for a smaller house now?”. Simply because the cost of things has increased by that much in the last 20 years. Homes are more expensive today than they ever have been in the past so you shouldn’t expect to get more for less or even close to the same amount of money.
Face Reality As It Is
It is that “simple”. But yet, so hard.
There are a lot of agents out there that are going to tell you what you want to hear and not what you should hear…the truth. I’m not one of those. If you are looking for the bullseye, black and white, no holds barred, definitive answer to your questions…you have found your agent.