Understanding the market: should I buy or sell?

“Should I buy or should I sell in the Grand Rapids area these days?”

This is a question I hear often, to which I try to answer with a combination of knowledge, experience, and data. Especially data. Because, unlike the formers, it is objective. In fact, nothing like numbers can offer a clearer picture of how the real estate market is behaving these days.

For starters, did you know that GRAR provides free monthly statistics, divided by county? For example, if we wish to learn what is happening in May 2018 in Kent County we’ll discover that residential listings are up by 1.8% compared to a year ago, while multi-family and vacant land listings are down by more that 20%.

When we look at pending or closed sales, statistics show that the number of transactions is below last year’s levels, but volume is increasing. Hence, here is one piece of information that will make all homeowners happy, no matter how we look at: values are increasing, significantly.

In details, based on closed sales the average home value rose from $219,063 in May 2017 to $240,557 in May 2018. That’s a gain of 9.8%! The year-to-date also rose from $206,723 to $221,408, with a gain of 7.1%. When we take in consideration pending sales, the gain appears even stronger: from $213,602 in May 2017 to $243,700 in May 2018, for a gain of 14.1% – and a 9.5% for the year-to-date (ok, I’ll spare you a few extra numbers.)

REALTORS® regularly receive bulletins and updates. Therefore, to complete the picture with more data from the GRAR weekly newsletter (specifically the June 18, 2018, issue) in the Greater Grand Rapids Metropolitan Area – which includes “Kent County; Georgetown and Jamestown Townships in South East Ottawa County; Ionia County; the six Townships in North East Allegan County; and the North half of Barry County, including all of Gun Lake” – the average sale price of a single family home is now up 7% compared to last year, at $217,175.  Also, based on pending sales, the average number of days on the market is 44 for multi-family homes, and 22 for single-family units.

The data seems to point to a strong market in which the trend is steady and home values are increasing. My personal local knowledge and experience align with the data. For example, we are still observing multi-offer situations. For fun fact lovers, I have direct knowledge of listings which received 8, 13, 17, 23 and comparable number of offers. I heard from a colleague of a listing with 45, which seemed a record, and then just six days ago of one case of… 58 (yes, you read correctly, fifty-eight) offers for a property in Grandville, MI. But wait: the same day I spoke to an agent who had planned to write the 59th!

To corroborate these findings, Freddie Mac’s analysis forecasts a 3% home sales growth in 2018 and a 2% in 2019, notwithstanding the increasing mortgage rates. Alongside, home prices are expected to grow by 7% in 2018 and a more moderate 3.1% in 2019.

Finally, the general answer to our initial question, the one we have been waiting for while reading this entire post is: yes! You should be able to confidently buy and sell. No one can predict the future with absolute certainty. However, given all the data, if you are planning to sell there could be no better time. In the GRAR area inventory is at a mere 1.2 months, and properties are still receiving multiple offers – we’ll touch on this specific topic in a later post.

If you are a buyer, the market might seem intimidating right now, but postponing your purchase may not be the best approach. Prices are going up steadily, interest rates are also increasing, while borrowing limits typically do not. The good news is that if you buy today you’ll have secured a better interest rate, and by next year your investment will have yielded an average 7%.

Happy sales everyone! And yes, I am extremely contactable if needed be.

GL

 

 

 

 

 

 

 

 

Open Houses – Why. You. Should. Absolutely. Go!

This post will be colloquial. It has to be. Just like during an open house, where interaction with its host becomes key to a fulfilling experience, and possibly to achieving your dream: your perfect home is only a few steps away. When you walk through, you should engage in a conversation with the agent at hand. And this is why.

So, you have been scouting for your new house with your agent. Or perhaps you just decided to buy your first home, you do not have an agent and you do not know exactly where to start. Or you are visiting town from out of state, caressing the idea to move (Grand Rapids is a perfect place to be, by the way!) In any caGreenridge Open House Signse, open houses seem a perfect way to spend a few hours during the weekend to acquire further knowledge and experience.

Before you walk through that door, please know that you are the guest(s) and all of the agent’s attention is geared towards your needs. Agents holding open houses are there to help you, and to answer all questions you may have.

Different agents have different styles and ways of hosting the event. Personally, whether a host of my own listing or that of a colleague, I typically welcome you, introduce myself, ask for your name(s), and offer some materials, such as the listing card, and my business card. If extra information is available (i.e. a land survey, an addendum, or the seller’s disclosure,) I point it out. Then I leave you free to visit the property – thoroughly as you please – and to make your own comments and evaluations. You’ll find all lights on for best appreciation, and intrinsically to reveal that the electrical is in perfect shape; and sometimes you’ll hear music in the background, when a sound system is available. Do you like jazz? 😊 At the end of your tour, or anytime during it if you so wish, I listen to you, talk to you, and share the ins-and-outs.

Interacting with the agent is one of the best ways to learn more about the house you are visiting, and other similar available opportunities, such as properties not yet on the market. It is alright to clarify that you are already working with an agent if you have one. If so, share the name of your agent. Why? It will facilitate communications in the future. For example… you may love the property but perhaps you feel afraid that a multiple-offer situation would drive the price up. But what if the property goes unsold, for whatever reason, and the seller decides to lower its price? In this case, a diligent listing agent will immediately call your agent and share the news. In short, you will have first dibs, and a chance to buy your dream home at the right price. Simply because you left your agent’s name at the open house.

In case you are not represented by an agent, you will have the opportunity to interact with one, and possibly vet him/her if you later decide to use some help. Case in point. In 2017 I was hosting an open house for one of my listi12ngs (pictured here) in the Baxter neighborhood of Grand Rapids, when a young couple came through. They were qualified, unrepresented buyers – in other words, pre-approved and without an agent. They engaged in a friendly conversation on a variety of topics. It was so pleasant that we connected instantaneously. The following day we went out for a slice pizza and a chat on their real estate needs and dreams, I started working for them, and a week later we had an accepted offer. Market conditions then were overwhelmingly favoring sellers, thus making multiple offers above asking price the norm. Yet, with some attention to details, persistence, and a back-up offer, we were able to secure their dream home, at the right price, and especially within their budget! Recently, I visited these clients – I was privileged to be invited for dinner – and witnessed first-hand what a paradise is now their new home, furnished with exquisite taste and touches of their love and enthusiasm everywhere. Just because of an open house and a chat.

For those who love statistics: This weekend – June 9-10, 2018 – in Kent County there are 231 Open Houses (GRAR, June 9, 2018.) Of these, 89 are in the City of Grand Rapids, 14 in the City of Kentwood, 13 in the City of Wyoming, 11 in Caledonia Township, 7 in the City of East Grand Rapids, and 3 in the City of Grandville.

Time to give Open Houses a try.

Happy House Hunting!

GL

For Sale By Owner – Is it always the best option?

West Michigan is a much sought after area due to its beauty, services, and vibrant life (I will cover the advantages of living here in my future blogs.) Not surprisingly, these days in Grand Rapids and surrounding areas there are fewer properties for sale than usual and high demand for housing; in other words inventory is extremely low and we are experiencing what we call a seller’s market.

In market conditions such as these, in order to help my buyers I regularly scout for properties not yet on the market, properties not at all on the market 😊, and properties not listed through the MLS, such as For Sale By Owner, or FSBO’s

Why my interest in FSBO’s? My very first closing was originally a FSBO – before I was asked to list it. It ended up being a cash deal closed in just eleven days, with the bonus of netting my client a little more than expected. With great satisfaction for both parties.

Here in Kent County, the number of FSBO’s currently available totals 130 (Zillow –  May 24, 2018.) As comparison, the number of properties currently listed through a broker equals 1022 (MLS – May 24, 2018.) In other words, if we assume that almost every FSBO is also advertised on Zillow, at this time for sale by owner properties constitute about 12.7% of all properties on the market. A significant number. But do all the FSBO’s eventually close without the help of an agent? As per my experience, the answer is no.

Often sellers choose to market their own property without an agent in an attempt to save some broker’s fees. This seems a logical approach. However the reality speaks differently. Many sources are available to provide data. Among them I find this study quite revealing: on average, FSBO’s net less than properties listed by an agent. And here are some points for reflection.

  • Fees. Selling as FSBO seems a good way of saving commissions, both listing and selling sides. While notable – a few thousand dollars – these commissions are however insignificant when compared to the several hundred thousand or million of dollars a property is worth. As percentage, these fees can be more or less what we customarily accept to pay – with no objections – for wire transfers, ATM withdrawals, credit cards, or online payment vendors. But there is more, below.
  • Offer. Buyers are aware that FSBO’s are not paying broker’s fees. Therefore they will try to make an offer just a few thousand dollars below asking price. Additionally, any agent bringing their buyers to the table will protect their clients from having to pay their commission by adding a provision to the Purchase Agreement, making it the seller’s responsibility anyway. In short, the only potential benefit of selling FSBO – saving on commissions – is neutralized.
  • Experience. In the negotiation process, the experience of any agent vastly surpasses that of a do-it-yourself seller. No wonder a represented buyer will enjoy the best end of the deal! This advantage alone could be worth thousands of dollars, possibly more than the listing broker’s fee alone, and should put FSBO’s on notice.
  • Knowledge. Markets move, often quickly. Agents who operate daily in these markets possess the experience to properly price a property. Why is pricing crucial? A property hitting the market will generate the most interest within the first three weeks. One that is incorrectly priced will not attract the right pool of buyers or not attract buyers at all during this critical window of time. Chasing down these buyers with multiple price reductions while the property sits unsold can be very costly!
  • Marketing. Visibility is key. Agents enjoy a variety of marketing tools at their disposal. The most powerful is the Multiple Listing Service, or MLS. When a property is listed through an agent, it is immediately placed on the MLS, where it becomes visible to all agents and the general public. For example, this is where all current listings in the GRAR area can be found. FSBO’s do not have access to this tool. Sometimes, after unsuccessful attempts at selling, in order to be listed on the MLS a few FSBO’s will resort to entering into a limited service agreement, which carries a cost, further eroding their net profit.
  • Showings. Listing your own property means making yourself available to all buyers. Anything between 8 am and 9 pm is typically a go. Phone calls, emails, scheduling, key arrangements, walk-ins (isn’t that “For Sale By Owner” red sign in your yard?), answering questions, and similar tasks  can be time-consuming, and time is precious.
  • Closing. The good news is that in the end a FSBO will receive an offer. It might take some time, a few price adjustments, a few open houses, a limited service agreement, or even the help of… a listing agent 😉! But there is still work to be done to close. Deals fall apart sometimes. And when that happens properties could lose value due to the stigma that something could be wrong – whether true or not.

In the end selling as FSBO can be a wonderful experience, rewarding sellers with great satisfaction. Or could become a time of frustration. Whether you are planning to sell your property as FSBO or with an agent, do not hesitate to contact me, even if just for some advice.

Happy sales everyone!

GL