As we head into the holidays, we are still seeing strong buyer demand and while typically this isn't a time sellers flood the market with listing, there are still sellers listing to take advantage of the market conditions. For those of our readers who do not follow our blog regularly, in 2021, and more specifically the latter half of the year, mortgage rates fell below 4% and remain there. As we approach 2022, rates are rising and buyers need to be serious about taking advantage if this climate if they are looking to finance their home. Sellers who are coming to the market are well aware that they have leverage. BUT, and this is the big BUT, sellers cannot ask way above the asking price and expect their home to sell. In this post we will discuss current market influences the leverage Sellers have why we expect this to be the case for the next few years and finally, what that means for pricing and selling your home.
According to the existing home report from NAR a year ago, the inventory of unsold homes is down 13%. There are fewer homes on the market and more buyers competing for them. Buyers are taking advantage of the fact that the rates are expected to rise and prices are expected to go up. As soon as a home hits the market, if it is priced correctly, it will typically go under contract in a matter of 1-2 days (sometimes within hours) with a winning offer that is clean, fast, and without significant burdens on the seller. Multiple offers, many without contingencies for financing or inspections are not uncommon because there simply is not the inventory to choose from and demand far outpaces supply. Currently throughout Orange, Durham, Wake and Chatham counties there is under 1 months supply of inventory available based on the past 12 months of sales. Less Inventory means Rising Prices as this simple video illustrates.
Are home sellers at more of an advantage in The Triangle than in other parts of the US? In our opinion at this time the answer is a resounding, "Yes". Raleigh Durham, Cary, Chapel Hill, Apex etc. have a growing job market and are attracting new and younger people because of the tech market and being a hub of higher education. Older buyers are drawn here for these reasons as well as the ready access to a major airport and to world class medical facilities. The quality of life here is also attracting buyers who can work remotely. It offers nature and big-city culture. Today's buyers can live anywhere, and The Triangle offers an incredible lifestyle and amazing real estate.
When we take a macro view that considers the "competition" such as Charlotte, Atlanta, Richmond, Washington DC, and others the Research Triangle despite the rising prices; continues to shine. As we discussed in our earlier Blog "Are You Buying at the Top of the Market" My NC Homes believes we could easily see home prices rise another 30%-50% over the next few years. It is rare that you have a confluence of industry, culture, and nature to offer a community. For all of these reasons, beyond the national trend of buyers competing for housing, local competition is exceptionally high. To see more on Buyer Demands see this blog.
Armed with an understanding of the market and the given the strength of buyer demand, Sellers rightly believe they are in command when it comes to selling their home, and it's hard to argue with that position. This is precisely what it means to be a seller's market. Sellers have the leverage to pick and choose the best offers at terms that work best for them. And we are definitely seeing this happen.
Homes& continue to sell above asking price, but only when priced correctly to begin with. Seller's need to understand that when homes are priced unreasonably they are still staying on the market unsold. The simple truth is the longer they remain unsold the less leverage a seller has and the lower the eventual sales price. Market data is widely available to anyone willing to spend a little time online. Do not believe a Realtor who claims that they can sell your home well above market value. It is the rare buyer desperate enough to make a very imprudent purchase that will not hold its value. The Brokers at My NC Homes know that at the end of the day it's buyers who ultimately set market value. If buyers aren't actively bidding against one another or fearful that this will be the case, they aren't going to offer above list price. Even in our current market. That being said, homes are going above asking price, and that is largely due to the competition between offers, driving prices up. Smart Brokers discuss their marketing strategy in advance with their sellers. Pricing incorrectly squanders the leverage sellers are seeing. Understanding how internet real estate portals work, pricing strategically, and having a Realtor who invests in professional photography, videography and walk through floor plans pays as this is what will generate multiple offers creating the atmosphere necessary to get buyers bidding and drive the sales price up.
Occupancy After Closing
We are seeing more sellers negotiate post-occupancy agreements. What is that? It is a useful tool for sellers who want to sell, but need to stay in their home longer. A hesitant seller who wants to take advantage of market conditions can get a post-occupancy agreement with buyers to have more time for settling affairs or looking for new housing. This works for those looking to downsize as well and needing to sell or divide assets. Not all 30-day offers are desirable for these sellers. Occupancy after closingis another type of leverage sellers have.
Many buyers are submitting offers waiving contingencies that have the potential to make deals fall through. Some of these are simply smart thinking on the buyers side. Being preapproved and able to move quickly in regards to a mortgage is absolutely required. Buyers waiving appraisal contingencies and inspections is another example of the leverage a seller has right now. We do not recommend forgoing inspections and this is where buyers having highly experienced agent with with experience in building is advantageous. If a buyer is going to waive inspections as part of your offer, you need to know what expenses you should anticipate. Remember in NC a buyer hands over a non refundable "diligence fee" to the seller promptly once their offer is signed and becomes a contract. In the past year we've been seeing these fees range between $30,000 and $100,000 at which point it's a given that the buyer is indeed committed and even if the inspections turn up a number of issues, the seller may or may not be willing to work with the buyer; just another sign of the leverage sellers have in today's market.
To fully appreciate the leverage a seller has and the ways buyers can compete in todays seller market, you need an expert local realtor to properly price your home and represent your interests. My NC Homes has over 60 years of combined experience and we offer an expert understanding of market conditions to buyers and represent sellers serious about their investments. Contact us today if you are looking to buy or sell on The Triangle.Posted by Larry Tollen on