Helping Buyers in a Challenging Market – Hello, I’m Mike Acquisto. And this is my lovely wife, Shana. Thanks for joining us today. And we are going to be talking about helping buyers in challenging markets specifically right now in March of 2021, when we have way too many buyers and not enough sellers.
Yes. I’m hearing from all of you that you’re just it’s so difficult because you’re putting offers all over the place and, you know, you’re going in way above and, you know, foregoing every taken on every expense, actually, for the seller and still coming up short. So I think my advice is maybe we need to change the buyer’s expectations. OK, so it’s easy. Everybody, you know, gets in this flow of going with the trend. You know, I want this new home here, you know, and you’ve got these, you know, specifics of what you need.
But I think that let’s not forget some of these things. One is maybe we need to think about homes that aren’t as desirable and that doesn’t sound too appealing. But what about a home that may need some updates or just may need a little tweaking?
You know, I think that we should start looking at those something that’s not as desirable, because if you think about it, if you’re looking at spending going up 30 to 50 thousand dollars, take that money, put it into a home and do the upgrades yourself. And it’s a little you know, it’s difficult. Right. And maybe they don’t have the time, but how much time are you spending out there, putting in offers and going through this exercise to come up short? It’s difficult.
Yeah. So I am thinking about this. I was just trying to listen in process what’s going on here. So maybe it’s not that there’s necessarily a shortage in homes, there’s a shortage in desirable homes, and there’s a big difference between what a property is worth that is fully updated or knew or built at a certain time in a home that’s built in another time. I’ve been waiting for this to happen extremely patiently. I’ve been waiting for the time to we got far ahead with the price of a brand-new construction with these modern items are.
And all of a sudden, what is a pre owned home that is built just before these things changed? So I don’t remember the year that these items changed, that this style kind of changed. But there was a trend that the preponderance of homes that were built around here were like a darker Pantone.
I don’t know if they’re more of a transitional model. Is that what that was while before it was a traditional.
Ok, so I guess if I was to define the words, a lot of the homes are traditional around here because they were built at a different time. And now the new ones you’re saying are transitional, modern ish, rustic, modern farmhouse. Sure. So whole different styles. And looking at those different categories, if you were to say there’s a percentage of the homes here locally that are built like this, like traditional. I have no idea what the numbers are, but you can think along in your head, and why doesn’t everybody, chat, in what percentage of the homes locally do you believe, like of all the homes are traditional in style and all the homes in Collin County?
Sure, yeah. Let’s define Collin County. Well, that’s difficult, because now the issue is we have new construction and all the new construction is a new trend. No, I understand.
So look what I’m trying to define for everybody here is to really look at it and say, well, how many homes are transitional? Our traditional, traditional, traditional, traditional. So, chat, in and give me in Collin County what percent you think all the homes are traditional, right. And then you’ll have to look and then say, what amount are the moderate, the new style, the new style modern or farmhouse? And those are different things. Right. So there’s
because a person out there likes one of them or the other, most likely. I mean, they could favor both of them over traditional. So those are different styles. Right. I’m willing to bet, in my opinion that it’s something like, I don’t know. Eighty five percent are traditional. The whole thing, because you have to think about all the homes that aren’t on the market, people get them ready to put them on the market.
Yeah, but the style changed about five years ago, I’d say, right? Sure. Five years.
We’ve had a lot of growth, a lot of yes, we definitely have. But mean not a. Yes, a certain amount of growth in the last, I would say seventy to seventy five percent. OK, that’s fine. Yeah. And then from there then you have a certain amount of the other ones.
So maybe it’s half each. I don’t know which way you divide that up. So when you’re really looking at it, of all the homes out there, what your clients are looking for, really, if they’re looking for a newer style, is what they probably have in their mind is they’re looking for not one hundred percent of the homes on the market, but they’re looking at this smaller subset.
And if we just to find that maybe it’s seventy-five percent, I’m thinking it’s eighty five or whatever your number is. Right, that there’s only twenty five percent of the homes left and then those are divided, you know, 50 50 between those two styles, if they’re choosing one or the other, they’re only looking at, you know, 20 percent of the market. Yeah, right.
And then dividing that up, they’re looking at this super like pigeon holed thing. So what I’ve been waiting for is the time when all of a sudden there’s a huge price difference between this style home and these style homes. Right. Because it didn’t make sense for a long time to me. Why a new construction with all these choices are worth this and why this one is worth the same.
There has to be this difference that starts to separate them because new construction costs that are coming in now are way up here. And there’s a lot of reasons for it with the pandemic, with all these short supplies of these things, but the cost associated with one of these new homes is like here and the traditional is down here dramatically different. So I think that explanation really sums up why you’re having a problem, because you want like new home and new thinking here. But the reality is that’s a small subset of all the available properties, of all the homes Lopate.
And, you know, we kind of all go with what we hear, you know, and what everybody else is doing. So I think it’s our job to change these expectations. Right. So change your buyer’s expectations, start looking at less desirable homes, giving them, you know, start helping them and making them see what they could do, give them a vision of what they can do with a less desirable home. Right. And how much they would spend versus how much they’re going to go over, you know, in the bidding in the bidding war.
You know, the other thing is you can do a search for days on market, you know, find homes that are on the market for a while. Why have they been on the market for a while? A lot of people discount those pushing to the side because they feel like there’s something wrong with it. Well, what is really what really could be wrong with it, right, that you couldn’t fix with the same amount of money that you would be spending going over and above while.
So if we’re trying to predict where this is going to go, let’s understand this just to talk. Right. So as we have this problem with new homes, with the shortage of homes and people wanting in different styles, you said in Boise, Idaho, your brother mentioned to you a specific number, right? Hundred and fifty. One hundred and fifty thousand dollars is how much somebody recently over paid above the list price.
I’m on a single family residential home. Do you remember the price point? I think it was seven hundred. So they went seven to eight fifty. Yeah. OK, so with understanding that, think about maybe Boise’s ahead of us as far as demand and shortage of homes because they’ve been having this problem for a while. But imagine if that’s where we’re headed to a place that your buyers are paying that much over to be able to buy the home because it has the right style, because it has that. Is that a scary market for you or are you super happy that you currently own a home and you have value that’s getting created in your while?
The market is getting pretty creative and creating the market. I hear people saying, oh, well, it’s not going to appraise. You’re going to have this. You’re going to you know, but the market’s being recreated. So we’re setting a new standard.
So, yeah, just no, we’re kind of going in. That’s why we want to talk through this. And then what about the inspection? What do you want to make note? Well, that yes.
So in helping your buyers, you know, we’re having to go in. And I also want us to to kind of remain calm and help our clients, too. So a lot of times we’re going in and having to, you know, basically. Eliminate an option, period, right, and that gets a little scary for a lot of buyers. Yeah, what I suggest is, you know, maybe even have somebody that an inspector or someone that could come in with you during your showing have a super thorough showing and look at the mechanicals and look at these things ahead of time right now.
And that way, if you do that, then they’ll feel a little bit better about not having an option, period. You know, we talk about it on the selling side that we encourage all of our sellers to do that so people will feel comfortable not having an option, period. Right. So it’s protecting the seller. But if you if you kind of plan ahead and you, you know, get somebody that, you know, an inspector, somebody just to do like a quick five point inspection, just check your mechanicals, then your buyer is going to feel a little bit more comfortable.
Now, just because they don’t have an option, period, doesn’t mean they can’t have an inspection. They just don’t have the right to terminate. Right. So you can at least have your inspection done and see what’s going on with the property. So your buyers are informed and they feel comfortable knowing what’s ahead of them instead of being shocked. Right. So there’s some things that we can do there to ease their mind.
Wow, that’s a lot to kind of digest, I think that’s a whole separate thing about like this five point inspection, which items would you really do? So maybe we’ll put that on the topic list for. Yeah, for four relatively soon and we’ll cover that one. If you could only inspect for a couple of things, Chat, and now what you would inspect for if you only had a limited amount of time with a professional there to ensure that the homeless were in good order.
If you could only do a five point inspection, what would your five items be if you had one person to inspect it in a super limited amount of time? This is a really crazy scenario in which we could be looking at that.
These people are paying way above price, that they don’t even have time to do an inspection. And like we’re shotgunning what’s going on in real estate. Crazy world. And who benefits in this is the sellers and agents who care, who know what they’re doing and who are experienced and who think through logically what they should do for their client and always have their client’s best interests at heart. If you think about this, the buyer or like the automated algorithm doesn’t win in this scenario.
They definitely don’t. So what you always vote for is a full service experienced agent is to have challenging times in challenging times. You, the agent that cares, is going to get a larger percentage of the market when everything is homogeneous and it’s all the same. Right. And we we do that. Then who wins? There is the computer. The computer gets really scared when it can’t figure out these variables like computers are amazing at chess.
Because there’s predefined variables when you have randomness and chaos and huge variables and unknowns and things that you kind of can’t go through, then you, the experienced agent that knows and cares, you are the true winner.
You’re the true winner. So I just glanced over and saw that Mike Sheppard actually goes into the attic and does a thorough inspection himself. So maybe he’s for hire and maybe you guys want to take him along on your showings and let him go in the attic and do his thing, you know?
Well, and there’s well, there’s a lot of people that are out of work right now. So I’ve been hearing and maybe we come up with what these five items are and maybe we do come up with a person to do these inspections. I don’t want to jump ahead of ourselves, but if if we get a good list of these five items that we really want to check and you don’t feel comfortable doing them, and we want to have a certain amount paid to a personal look at these couple of items.
They’re not an inspector, but just like we don’t even have enough time to do this, then maybe we could look at something like that. It’s all about doing what’s right for the client and finding a way to do that.
But, you know, and, you know, Jodi mentioned that even the fixer uppers are in a crazy market. They are. So maybe you have to go to even more super fixer upper, you know, but look beyond that. Look at days on market. Look at look at homes that may have some sort of issue even and see what the cost of that would be. And, you know, we’ve got to really start digging deep to find our clients ‘ homes.
So Mike Shepherd says he swims in the pool just to make sure of the chlorine levels. Right.
I’m glad that he personally I mean, that’s amazing plumbing done because things could be going on that you’re not aware of and those are huge issues. So, yeah. Interesting. Thank you guys very much. We’ll look at that and close that topic. But I would love to hear from you guys on this. So change your buyer’s expectations, start thinking about this and then let’s talk about it next week in our meetings of how we can help each other. – Helping Buyers in a Challenging Market-