The one thing that we understand above everything else right now is that this market can be frustrating. It’s frustrating for buyers, because they are getting outbid on multiple properties and it’s difficult to fully understand pricing. For the people who would love to sell right now — and take advantage of these extraordinary prices — the big question is “but where do we go?”
The great news for buyers is that interest rates are still at historic lows. With a trusted real estate advisor, you can navigate multiple offers and still win — and in some cases there are still some good values out there. Try not to get too emotionally attached, and have patience; it’s not always advantageous to be the winner in a heated multiple-bid situation. We do not have a crystal ball, but many experts say that we are only four years into a potential eight-to-nine-year year cycle. We could look back on 2013 prices and think “what a bargain.”
For sellers and the question about “where will I go,” this is difficult. If it’s time to downsize, you need more space, or you’re moving out of the City, it’s a great time to sell. If you want to stay in the City, your chances will improve if you’re working with a real estate agent who knows the market well, can navigate the offer process, and is a good networker. There are a lot of deals that are being done “off market,” and it’s important that you have an agent with an ear to the ground. There are a lot of reasons that people may sell their property without putting it on the open market (the multiple listing service or MLS). Some people want to maintain their privacy and don’t want hordes of people coming through their home, or they already have identified another property and need to sell quickly. These are just some reasons, but if you don’t have an agent with a strong network, you will never know about these opportunities. More than half of the deals that my partner and I have done this year are off market.
The interesting thing about a hot market is that sellers often think that they can get extraordinary prices without any effort. Preparation is still key and something that we feel strongly about. We take homes that look like a fraternity crash pad and turn them into magazine-worthy photo opportunities. Many buyers do not have vision, and you have to create the dream for them. You want people to walk in and imagine themselves in a beautiful environment and think that they can live this lifestyle. A fresh coat of paint, refinished floors, and professional staging often add as much as 5% or more to the sales price.
Over-pricing can be as negative as lack of preparation. Statistically a property will not receive any offers if it’s not within five percent of the perceived market value. This is tricky in a heated market environment and another reason why you need an agent who knows the market and isn’t afraid to tell it to you straight. An agent who inflates the selling price to gain your favor and obtain the listing contract is doing you a disservice. In almost every case this will result in a property sitting on the market and inevitably “chasing the market” to find the correct price. In this case sellers usually ends up with less in their pocket than they would have had the property been properly priced in the first place.
Without the benefit of a crystal ball, we can’t predict where prices will go, but based on historical data, we believe in the value of real estate and take great pleasure in helping counsel our clients. We’re always happy to share our two cents!