The Market is Abuzz – March 2019

It did not take long for the Grand Rapids housing market to go into spring mode, mirroring the behavior of its past four years.

Extremely low inventory – a measly 1010 residential listings in the entire Kent County – is once again giving sellers an advantage. No matter the property, design, age, area, school district, and price point to a lesser extent, multiple offers seem again the norm.

Whether a $180,000 ranch in Kentwood, a $135,000 cape cod in Wyoming, a $200,000 bilevel in Grand Rapids, or a $250,000 house in NE Grand Rapids, in this price range buyers are experiencing – and sellers are enjoying – competitive biddings, up to 9, 14, 20, and even 24 offers, the highest I am personally aware of. As we write, an offer of $20,000 above asking price no longer seems sufficient to win a bid for the most sought-after properties.

Properties are selling within days, if not hours, and in some cases before broadcast. Hence, buyers are competing at all levels: allowing Sellers to occupy the property for a number of days after close at zero cost to Sellers; offering partially or totally non-refundable EMD’s; limiting inspections to shorter periods than the typical ten days; bringing cash at close if property does not appraise – a logical consequence of offers above market value; willingness to pay seller’s closing costs; and in some cases even waving inspection.

Rush is a feeling buyers would prefer to avoid. However, in this market there seems to be no time to reflect. Your REALTOR® will be able to answer all of your questions and device the best strategy to help you market your property, or craft the best offer.

Happy house hunting everyone!

GL

Your REALTOR®’s Advice Is Worth Every Penny

We have all been there: hiring a REALTOR® to represent us in a real estate transaction. As REALTOR®, my best advice to you is to… follow the advice of your REALTOR®. This is key to success in real estate.

Two cases in point.

CASE #1. Jim places a cash bid on a REO property priced in the low $60,000’s. After a few days Jim’s REALTOR® shares that there are six competitive offers on the property. Jim asks his REALTOR® what he needs to do in order to secure the property. REALTOR®’s advice is to go $8,000 – or about 12.7% – above asking price. Jim has to tap into his 401k in order to find the extra funds, and knows that the property will additionally require approximately $7,500 in repairs. Nevertheless, Jim OK’s his REALTOR®’s advice with no hesitation. Jim wins the bid and secures the property. Jim rents out the property at $1,000/month. Three years later Jim’s property is worth about $130,000.

Let’s do some quick math:

  • $72,500 (purchase price) + $7,500 (repairs) + $1,550 (tax penalty for early 401k withdrawal) = $81,550 (total investment)
  • $12,000 (yearly gross rent) x 3 years = $36,000 (gross rent)
  • $130,000 (property current value) – $81,550 (total investment) + $36,000 (gross rent) = $84,450 (Jim’s gain)

In short, Jim’s agent’s advice was potentially worth $84,450.

CASE #2. Louisa hires a REALTOR® to purchase a residential property. This is Louisa’s first time buying a home and she has never worked with a REALTOR® before. Upon finding the perfect property, REALTOR® advises Louisa that due to market conditions and in order to win a multiple-bid situation, she’ll have to offer about $10,000 – or about 6.7% – above the $150,0000 asking price. Property could potentially be worth $190,000 after three years. Although Louisa has the ability to write a higher offer, she chooses to play prudently, and against her REALTOR®’s advice: $5,000 above asking price but not more. Louisa is outbid and she loses her dream property.

Let’s do some quick math:

  • $155,000 (purchase price) + being outbid = $0 (total investment)
  • $190,000 (property current value) – $160,000 (potential winning bid) = $30,000 (lost equity)

These two cases are similar. In both instances a REALTOR® recommended an offer above purchase price. The former yielded a 100% return over three years, the latter a 0% over the same time span.

Your REALTOR® is working for you, and your best interest is her/his goal. Your REALTOR®’s judgement and experience are worth every penny!

Happy house hunting everyone!

GL

Market Updates – March 2019

Time to look at the housing market behavior.

Generally speaking, inventory in the GRAR area has further decreased, and likewise sales, while in the last month listings have seen an uptick. Residential new listings have been in line with the same level of last year (833 in January 2019, vs. 835 in January 2018) multi-units have dropped by 34.4%. Vacant land instead has witnessed a sharp increase, from 82 new listings in January 2018 to 143 last month.

Closed sales have dropped by 8.4%, both compared to last year and year to date. However total volume has increased by 6.7%. The good news for homeowners is that property values have increased on average by 16.6%.

The average home now sells at $230,545 based on closed deals, while the pending suggests an even higher value, at $235,281.

No matter at how we see the market, it is going to be another hot season. Snow is melting, buyers are very active, competition abounds. My personal experience suggests multiple offers – up to 24 already! – over $20,000+ above asking price, and more properties sold before broadcast.

Sellers, time to make your move. Waiting won’t give you an advantage: low inventory is driving prices up. Buyers do not sit on the fence. You’ll probably have to go through a few biddings before securing your dream home. And if you are planning to buy contingent to marketing your house, do so with confidence. Your own property will sell in a matter of days, if not hours!

Happy realestating everyone!

GL