This April, one of Inman’s most popular recurring theme months returns: Back to Basics. All month, real estate professionals from across the country share what’s working for them, how they’ve evolved their systems and tools, and where they’re investing personally and professionally to drive growth in 2022. It’s always smart to go Back to Basics with Inman.
It seems that every day brings more doom and gloom news around home inventory. Everyone is stretched thin and there seems to be no end in sight. While we wait for the big picture items like supply chain to correct, there are still things we can do. For many buyer agents, it may start with setting appropriate expectations upfront with your clients.
If she could, broker Cara Ameer would hand this letter to many of her buyer clients. While you might not feel able to share a letter like this, it offers a host of suggestions to help you talk to your buyers about the options that are out there and change the narrative to one that offers them some measure of control.
I know — another day, another property search. There is hardly anything on the market. You aren’t seeing much in your listing feed from the MLS, and I know you secretly check Zillow for FSBOs too. I don’t blame you, because a buyer has to do what they have to do.
Just know that in the current market, the seller may not want to work with an agent, so I can’t protect you in that case from what they and you don’t know. But, that’s another matter for a separate discussion.
You’ve had me add geographic areas, subtract them, put in property-specific criteria that eliminated the nearly 10 options that came up in your search, then take some requirements out after weeks of nothing coming through. I know — you must have parking, air conditioning and a yard of some sort.
An open, updated kitchen and not having to do much work beyond a coat of paint on the inside would be nice.
Tanks of gas have been expended by both of us driving numerous areas and neighborhoods only to get there and quickly determine the property or area wasn’t for you. I know, you looked at Google Earth and measured in great detail the proximity to the places you like and need to go on foot, bike, scooter, skateboard and car.
Commute times are not so much an issue because you can work from home. When you see a property in real life, of course it looks nothing like its virtual depiction and fishbowl photos.
Those bright, gleaming white cabinets online reveal an amateur paint job and old grainy wood showing through underneath. A schlock tile job and a choppy floorplan that is hard to get a sense of based on photos can also be very disappointing when you see it in person. Despite these flaws, these properties still sold way over asking price.
I get it. We both have low inventory fatigue. It is a challenging, difficult, uphill battle with dozens of buyers after the same thing. You’ve put in 20 offers that were extremely strong price-wise, but … those darn cash buyers. You have a tight budget and can’t afford to waive the appraisal or financing contingency because you are stretching yourself to the max and hoping to find extra money under your couch cushions.
You can offer a short inspection period and a quick closing though, because you’ve smartly been fully underwritten approved (at my insistence). But … sigh … the interest rates are going up, gas is expensive and driving around to just check things out is starting to add up.
Let’s pause for a moment and take a breath. I’m here to stop enabling this sentiment of despair and hopelessness. Let’s be clear: Trying to find a home to buy seems very much a “First World problem” with all that is going on in the world right now.
We need to change the narrative. Is there truly nothing you could consider in your price range or have you simply become so picky that you’ve eliminated yourself from the market? There are wants and then there are needs.
If you are an ultra-luxury buyer, you aren’t going to compromise and don’t need to. You likely have multiple properties that you can live in while you scout the market for the unicorn that checks all of your boxes or exceeds them, or you may tear down what’s there and build it to your specifications.
But for the rest of the buyer population? It’s time to start thinking differently. Most anything can be modified, changed or updated on some level to make it more liveable. There are numerous ways to get to this. With an array of home improvement products, hacks, tricks and twists, you can spruce up any property on a budget.
Whatever happened to buying what you can comfortably afford and working to improve it over time? My first home was a brown brick ranch from 1948. It had lovely textured brown laminate countertops and a harvest gold kitchen sink. Grainy oak cabinets with garish old hardware and an almond refrigerator completed the look. And the linoleum flooring was a huge wow factor (not).
But my husband and I lived with it. The bonus was that it had real wood floors that had been covered up by new carpet the owners had put down over them to sell, thinking that was a better option.
We bought this home when interest rates were a little over 6 percent. The 20 percent we put down yielded almost a $100k profit when we sold nearly two years later to relocate due to a job opportunity for my husband.
We did some things to our house as far as painting, refinishing the floors, a modest finished basement, landscaping and a new front door. We didn’t think about all the things we “had to have,” but rather considered getting a house itself the goal, the “must-have.”
It is time to start looking at the options as half full and not half empty. Yes, some choices are slim, but maybe you are over eliminating everything. It seems every agent I interact with starts off with saying their buyer has seen everything on the market and whatever they could find off-market and didn’t like any of it.
So, several months, price and interest rate increases later, now what? The buyer could have been in an advantageous equity position had they been less picky and bought sooner.
Start opening up your search. Stop placing so many limits that you don’t stand a chance before you start. Accept that no property is perfect and try to turn the negatives into a positive. Every property can seemingly have so many cons on a first glance, while clicking through listing photos.
Be flexible on location, even if it involves a longer drive to things. Think about paying yourself to put a roof over your head versus a little bit of an extra drive, bike ride or walk to a coffee shop. If you have flexibility on remote work or your commute schedule, that is even more of a reason to be willing to look at areas that will afford more options.
Everyone wants the turnkey gem, but look for that hidden gem that might camouflage real potential behind its dated condition or a less-than-obvious location. Generally speaking, there will be much less competition for those.
As much as you “have to have a detached home,” if you are getting priced out or competing with buyers who can afford more and focusing on the lower end of properties in their budget so they can make aggressively high offers, switch to condominiums or townhomes instead. Nothing is forever and you have to start somewhere.
Isn’t it better to start paying yourself and stop paying outrageous rent to over-hyped apartment complexes with amenities you hardly have time to use or landlords who keep putting Band-Aid fixes on things?
As a buyer, of course you should conduct your due diligence and screen for big-ticket items that could need repair or replacement. Special assessments, lawsuits and high association fees in condominium or townhome communities are also something to be keenly aware of. You absolutely should take a deep dive into all homeowners association documents provided to you.
Perhaps properties in need of some repair or that have some condition issues are opportunities for negotiation with the seller on taking care of some necessary repairs and/or replacements, a price adjustment or closing cost credit. Don’t necessarily run from what may seem complicated without taking time to understand the issue further and see how you can move through it.
Out of the available options, you may nix a good portion for varying reasons, but make a commitment to work with what is out there versus waiting for what could be, since, in the meantime, the interest rate and price needles keep moving upward.
Let’s consider if we were in a buyer’s market. I worked through that climate during 2008-2010. Having too much to choose from is not the answer. You may be overwhelmed, confused and hesitant to pull the trigger because it is difficult to decide. You will be concerned about prices and making sure you negotiated the best deal along with being fearful to commit because of what else may be coming on the market.
You might end up looking at 50 to 100-plus homes for sale due to all the indecision. You may also encounter sellers who are resistant to low-ball offers and other complicated terms, coming off the market like we’ve been experiencing, because they can be in a denial of sorts when things start to turn.
Today, there are all kinds of creative ways to buy a home that didn’t exist a few years ago, and some tools have always been there, but were not paid attention to as much that can and should be utilized where appropriate. Just remember that anything worth having takes some work.
What about uncovering off-market options? There are numerous ways to do that, too. Besides your agent networking with agents who have listed and sold properties in the various areas that you want to be in, walk the neighborhoods with your agent to reach out to neighbors to ask if they might know of anyone who would be interested in selling. Create intention and action which can lead to results.
There are always rentals with lease dates ending, and owners, realizing the amount of equity they have in their property in comparison to what they can realistically command rent-wise, may see selling as a huge upside right now. Have your agent review properties that may have tried to sell a few years ago, but did not for whatever reason, or are owned by out-of-area owners to see what might come of things there.
The point is, in a market like this, we have to consider all options and work to create inventory. Is it easy? No. It takes legwork, persistence and hustle, but also seeing the options in front of you as opportunities.
Not everything works out, but from those experiences also comes opportunity. The glass can be half empty or half full, depending on how you look at it. And looking at it half empty is only going to make the search seem that much more prolonged and difficult.
Ultimately, we get to choose our outcome by the actions we take or do not. The choice is yours.