Each of the last 8 years that I have been an active Realtor in residential real estate has been completely different for me. When asked about seasonal trends, it’s rather difficult for me to give a solid answer confidently since so much of the market is affected by economic trends and interest rates that don’t follow a “seasonal” pattern.
Looking back at 2014, there are 3 things that stick out to me as being “different” than previous years, at least in my market in Orange County and parts of Los Angeles County.
#1 – Standard sales are now the norm.
Most of my closed sales in 2011-2013 were short sales, whether I was representing the seller or buyer in any given transaction. I had become quite intimate with the short sale process and was rather inundated with questions from people all over the country who had taken to heart one of my blog posts about Bank of America short sales from back in February 2011. In 2014, ALL of my sales were standard sales. Sellers had equity in their homes, and buyers didn’t have to wait 3-6 months to purchase an “as-is” type of home that had to be approved by the bank. Repairs could actually be negotiated during the escrow period. Termite inspections and repairs were actually being completed instead of waived. Closing cost credits were being offered at times. And everything moved fast again, whether it was a 10-day close with an all-cash buyer or a 30-day close with a financed buyer.
#2 – Staging your home made all the difference.
Now that buyers weren’t getting that “sweet deal” on purchasing a distressed home this year, sellers had to really get their home “show-ready” in order to compete with other comparable homes on the market. A clean house is nice, but this year’s buyers were needing to be impressed enough with a property to have it stick out in their minds. Enter: the professional home stager. Earlier this year I had a listing that was vacant and built in the 1960’s, but it had tons of expensive upgrades — new roof, new furnace, new A/C unit, new air ducts, new kitchen cabinets, new flooring, new paint, new electrical wiring, etc. For a seasoned homeowner, you know those things cost a lot! But, it just wasn’t selling as a vacant property, even despite a price reduction and some general feedback that the home was “nice”. We decided to have it professionally staged after being on the market for a few weeks with no offers. Next thing you know, we were under contract with a well-qualified buyer at a great price within two weeks after staging. I had another listing professionally staged later in the year, and we got our full asking price within 12 days of being on the market — the highest price in the neighborhood at that time. Another one of my condo listings was professionally staged this year too, hitting the market at the same time as two other condos in the same community with the exact same floor plan. And guess what? We were under contract before the other two and closed escrow before both of them, selling for a higher price as well. While hiring a professional stager to help sell your property should be looked at on a case-by-case basis, I truly believe that it should be an option that sellers highly consider if it makes sense for them financially and logistically.
#3 – Buyers are still quite picky despite lower levels of inventory in some areas.
Now, this may not apply to all buyers, but it was something that I experienced with my own buyers this year. I also noticed it with the types of offers we were getting for my sellers’ homes. Buyers have so much information available to them on the internet, so they can see whenever a property in the same neighborhood they desire sells for a lower price than another home that is currently active on the market. On the flip side, sellers know that too and expect that their home should sell for more since there aren’t too many homes like theirs on the market anyway — supply and demand. Sellers list their homes for higher than the most recent sale, and buyers offer less than what the sellers want, sometimes rather significantly. No one budges. Sellers then are baffled as to why their home isn’t selling within the first two weeks on the market like how it happened for their best friend across town. Buyers simply wait, as they knew that inventory might be low and planned their living situations accordingly to avoid being rushed to buy. At some point, both buyers and sellers have to budge, but gone are the days (for me at least) when buyers are involved in a bidding war and paying well over asking price. The lesson learned here is that sellers need to really think hard about what it takes to get their price and understand the type of buyers that they may encounter. Likewise for buyers, they need to understand that we’re not in the land of distressed homes on every corner anymore; getting that smokin’ deal that their cousin got three months ago may not apply in the market today.
So what should we expect for 2015? I think next year these 3 things will still apply. How to price a home to sell and what buyers should expect may change over the course of the year, but there will always be some sort of gap between the two that would need to be addressed. Always. And that’s what makes my job so interesting, exciting, confusing, frustrating, and rewarding, all at the same time.
For more information on residential real estate in Orange County or Los Angeles County, please feel free to contact me.