Friday, October 30, 2020

Q: What Scary Things Have I Been Seeing in Our Market?

Here are a few scary real estate market trends to watch out for this Halloween.

In the spirit of Halloween, today I want to talk about some really spooky things that I’m seeing in the housing market right now. It would behoove you to steer clear of these scary situations:

1. Deals falling apart. More and more buyers are getting cold feet; sellers are not realizing that the market’s shifting and they should be a little more realistic about where the market is now and where it was eight months ago. If we were seeing 5% of deals fall apart in the DMV last year, we’re seeing closer to 10% this year.

2. Appraisals coming up short. The market is at a certain level, and the appraisals are below it, so we’re having to try to find a happy medium.

3. Longer lists of home inspection requests. I wrote about the 1% rule in my book: If you’re selling or buying a house and the home inspection list totals up to 1% or less of the purchase price, you have a really good home. However, we’re starting to see longer lists that add up to much more than that. We recently had a three-page inspection list for what we thought was a relatively decent house.

   More and more appraisals are coming in under the purchase price.

4. Delays in settlement. This forces agents to have a lot of early conversations and set the right expectations with their clients and the companies they work with. I’ll tell you from firsthand experience that credit unions are having a hard time getting to settlement because of the hours they work and the sheer amount of mortgages they’re financing right now. This can be really scary for you as a buyer, especially if you have a strict timeline. 

5. Fear of the market. I'm getting a lot of calls from agents, buyers, and homeowners who are fearful. I usually tell them not to let the news dictate what’s going on in their household. As for the agents, I’m willing to bet about 75% of them have only sold in one type of market and don’t know how to adjust when the market shifts like this. If you’re a young agent out there, I encourage you to reach out to more experienced agents for advice and mentorship. I’d be happy to answer any questions you might have.

6. Condos losing FHA appraisals. This was the first sign that the market was shifting way back in 2007. When condo owners start to miss their mortgage payments, the first thing they actually miss is their condo fees. When you start to see that happening a lot in a condo complex, they become delinquent, and the FHA won’t approve any loans for the entire condo complex.

If you have any questions for me about these scary trends or real estate in general, don't hesitate to reach out via phone or email. We’d be happy to help you steer clear of all the ghosts and ghouls out there. I look forward to hearing from you soon.

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