Responding to Today: How to Avoid – and Fix – Costly Mistakes

Hot market or not, the agent you have representing you truly makes all of the difference in how your transaction will play out. The latest installment in our Responding To Today series addresses how to fix, or better yet avoid, mistakes that can have a serious impact on your checkbook!

Real Estate in 2021: How to Avoid – and Fix – Costly Mistakes

For those buying or selling a home in today’s ultra-competitive real estate market, time is not a luxury afforded to most. Decisions are made quickly, with many buyers in particular left to worry that they’re setting themselves up to make a costly mistake. And while homeowners seemingly have the upper hand in this universally hot sellers’ market, the myriad of factors that play a role in a frenzied sales and negotiation scenario leaves much room for error. 

So what’s a buyer or seller to do in this unprecedented market? We sat down with two leaders in the industry-Christy Budnick, CEO of Berkshire Hathaway HomeServices and Allan Dalton, SVP of Research and Development for Berkshire Hathaway HomeServices-to hear their recommendations for avoiding, or fixing, many common and current real estate missteps. 

Q: A recent Wall Street Journal article chronicles the regrets and mistakes of recent buyers who rushed into a purchase-but in this market, many buyers feel that’s the only option. How can would-be buyers feel confident that they’re buying the right house at the right price? 

Christy Budnick: Ifs normal for buyers to feel this type of stress in such a strong sellers’ market. But I would encourage them to look at the big picture and the benefits of a real estate purchase in the long term. With interest rates at historic lows, if a buyer plans on staying in a home for 10 years, the average appreciation of that home, plus the tax advantages of home ownership, will typically make the higher-than-normal sales price more than worth it. 

Allan Dalton: In a highly competitive, multioffer environment, you want to be able to buy on the best terms, but you don”! want to lose it. So as you’re figuring out what your top offer number will be, ask yourself this question: “Am I willing to deprive myself or my family of this lifestyle because of $100 a week, $50 a day, $50 a week?” I never want to be cavalier with money, but the point I’m trying to make is that I’ve never bought a home I wouldn’t have paid more for. If you’re investing in your lifestyle and you break the numbers down in that manner, it’s much easier to answer that question and understand if you actually feel like you’d be paying too much. 

Aside from the money side of things, don’t use a competitive market as an excuse not to do your due diligence. I would never buy a home without going back five or six times, parking in front of the home in the morning and also in the evening to see what traffic is like. Make sure you walk around the neighborhood and talk to the neighbors, especially the next-door neighbors if possible. If you’re buying from out of town, have your realtor do that work for you. I once bought a home from across the country and had my realtor take videos at 5:00 in the morning, 6:00 in the morning, 7:00 in the morning. That drove the realtor crazy, but the safety of my family is worth it to me. Before you make that offer, ensure there·s nothing that you could know that you don’t know-about the town, the schools, the home, the neighborhood, values, zoning restrictions. Because these are the things that end up making people think they made a mistake in buying a home. 

Q: Many sellers have been waiting to list their homes, potentially hoping to capture the apex of the market. What steps can these sellers take to avoid missing the right moment to list? 

Christy Budnick: This is such a debatable topic. The critical consideration in this decision is the relationship between supply and demand, and what can we anticipate about what might happen to supply and demand? Right now, supply and demand is completely in the favor of sellers. But what might happen to the frothy market as economic conditions change? By every indication, the strength of the economy and !he anticipation of inflation probably means that interest rates will continue to go up. Well, as rates continue to go up, fewer and fewer buyers will have the ability to afford the homes that they want to buy. As fewer buyers are in the marketplace, the relationship between supply and demand starts to level out, which will result in a cooling of home price appreciation. The summer is also a traditional time of the year where homes come on the market for sale. So you·ve got this combination of fewer buyers in the market moving forward and more homes for sale as we move forward. Those two things will most likely and I think undoubtedly create a cooling of home price appreciation. 

Allan Dalton: When the market is moving and changing so fast, it’s more valuable than ever to have a real estate agent-particularly if you are a seller in a competitive bidding war scenario. Let me give you an analogy: If you were a great football player and about to become a free agent, would you do that without the help of an agent? Of course not! When you have an asset that has great appeal and great demand, that’s when a realtor has the greatest value in maximizing that demand. It’s always better to rely on somebody who can navigate and manage and negotiate on your behalf-and create even more demand. 

Q: Some homeowners are waiting to list because they’re worried they’ll pay too much for their next home. Do you think this is a mistake or a good strategy? 

Christy Budnick: I just feel like now, 2021, is really the time to consider a sale and purchase, especially because of where I see interest rates going. Consider this: A buyer might be paying 

$30,000, $40,000 or even $50,000 more for a house today than they potentially could by waiting until next year. But wait. what are they getting for the home that they’re selling? Assuming the home you are selling is less expensive than the one you are buying, are you going to get $15,000. $20,000 or $25,000 more today than you might next year? So now I’m paying $50,000 more for the home I’m buying, but I’m earning $25,000 more for the home I’m selling, so my net differential is $25,000 negative to me. What”s the monthly payment differential? 

And if that seller takes a short-term hit to their equity-let’s say they buy at $50,000 right at the top of the market and it corrects-well, if they’re buying a home that they’re going to be in for eight, 10, 13 years, what does that appreciation annually need to look like, even if there’s a short-term blip in the value for the first one, two or three years that they own? It is so critical for people to think about these scenarios of value, payment and equity in a holistic way to make the right decision. Using a real estate professional with extensive knowledge of the local market is critical here in understanding the entire equation and its impact on your finances in the long term. 

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Thinking of Buying a Place? Ask These Questions Before You Make An Offer

Whether you are buying your very first condo or your fifth house, read on for some very important questions to have answered before putting in an offer on a place.

Getting ready to put an offer on a home? Before you do, ask these questions to make sure you’re moving ahead on the best possible deal.

Were there any renovations to the home? The sellers may have made improvements over the years that weren’t recorded at City Hall. Make sure you have a full run-down of all the changes that have been made, both to ensure structural safety and legal compliance, and to fully assess the home’s value.

How old is the roof? Just because the roof is currently in good condition doesn’t mean it’s not soon on its way out. Make sure you know how old it is and if repairs or a replacement may be in your near future.

How long have the appliances been here? You’ll also want to know how old the appliances are and what shape they’re in. Many home sellers update the appliances before putting their home on the market, so find out if this is the case. Make sure all manuals and warranties are left behind as well.

What are the neighbors/neighborhood like? You’ll have to drill down to avoid getting general responses, so ask if there are families with young children on the block vs. retirees, what traffic is like, what amenities are nearby, etc. For further intel, take a stroll around the neighborhood and chat with someone out walking their dog or doing some yardwork. Their friendliness – or lack thereof – could be an indicator in and of itself.

What’s included in the sale? Many sellers will include certain items in the sale of the home to help sweeten the deal, such as select pieces of furniture, lighting fixtures or outdoor appliances, like a lawn mower or hedge trimmer. On the flip side, you may be assuming certain items will be included that aren’t. Seller’s exclusions should be outlined in the listing description, but sometimes they’re not so be sure to ask.

Reprinted with permission from RISMedia ©2020. All rights reserved.

First Look: Home-Buying Season Is Already Booming

The 2016 home-buying season is in full swing, with homes in April moving 7 percent faster than one year ago, even as asking prices continue to break records. This, according to new data released this week by Realtor.com.

Median age of inventory is now 68 days, moving five days faster in April than a year earlier and 6 days faster than last month – pointing to solid momentum this spring. The median-priced home was listed at $245,500, 9 percent higher than one year ago and 2 percent higher than March. For-sale housing inventory is increasing on a monthly basis, but remains lower than one year ago.

“A robust buying season has already fully bloomed this spring, clearly demonstrated by our preliminary read on April inventory and activity on realtor.com,” says Jonathan Smoke, chief economist of realtor.com. “Pent-up demand, lower mortgage rates and strong employment continue to power the strongest and healthiest real estate market we have seen in a decade. Close to 550,000 new listings came onto the market in April, which helped total inventory grow 2 percent over March. However, we know that sales are picking up faster than inventory since the median age of inventory fell again by six days after falling a whopping 22 days in March. As a result we have 4 percent fewer homes available for sale compared to last year and homes stay on the market five fewer days.”

The median age of inventory for April is expected to be 68 days, down 7 percent year over year and down 8 percent from March.

The median listing price for April will likely reach a record high of $245,500, a 9 percent increase year over year and a two percent increase month over month.

Listing inventory in April showed a 2 percent increase over March. However, inventory decreased 4 percent year over year.

Realtor.com’s Hottest Markets receive two to three times the number of views per listing compared to the national average. In terms of supply, these markets are seeing inventory move 17-45 days more quickly than the rest of the U.S. They have also seen days on market drop by an average of four days from March.

Reprinted with permission from RISMedia. ©2016. All rights reserved.