Buyers and sellers are often wrong when they assume that the real estate market will do exactly what they want.
Buyers decide that they will only move when interest rates drop to an exact number, their “perfect home” appears on the market, and the sellers agree with all of their concessions. Sellers decide that they will only sell when they tie a price to a much hotter market, avoid all conversations about repairs, and maintain complete control over timing from beginning to end.
It seems like that type of inflexibility would be very rigid. In today’s market, it generally causes friction.
What is actually working right now is flexibility.
It’s about being able to understand what you really need to focus on, where you can still have some flexibility, and how to keep the deal alive so that each step doesn’t turn into an all out battle.
It makes sense as today’s market does not offer much help to consumers. With a 30-year fixed interest rate now averaging just over 6.5% (still higher than what many homebuyers in Rossville or Woodrow will see in their monthly payment), while still above what most homebuyers would consider “substantial”, we are seeing steady numbers in housing statistics. Specifically, with approximately 3.5 months of inventory, with a median price per existing home sale currently around $702,000 and current existing-home sales holding steady.
The market is not disappearing quickly, nor is it totally dead. While deals are occurring and taking place daily, the process of getting from one side to the other is going to be a little longer and more back and forth than when the market was running wild.
For buyers, their flexibility allows them to recognize their idea of an ideal home may not come as a complete package. In Pleasant Plains, a house could have the best possible location, but it could use some cosmetics; similarly, a home in Annadale could have the best design and floor plan, but it would have a much smaller yard. The total numbers (price, financing terms, etc.) may exceed what you were initially looking for, but there could also be seller concessions and terms that will still make the numbers acceptable.
The buyers that are willing to allow for flexibility with finishes, timing, and small issues usually do better than the ones that are set on finding a “fantasy” version of “the one”. Being able to see the whole picture of a deal and not just the list price gives you an advantage if you can identify the time when you have found a good deal.
For sellers as well, flexibility is going to look different from what we see with buyers; however, it will have the exact same definition. The homes that are selling today are mostly home sales by smart sellers versus simply confident sellers. As such, for these smart sellers, their prices should reflect the current price of homes that are competing against them in areas such as Huguenot and not based upon previous expectations. Smart sellers need to understand how they respond to repairs requested on inspections. In addition, smart sellers know when to hold firm and when to provide concessions to resolve issues.
Additionally, smart sellers recognize that providing the buyer with options regarding timing of closing, credits, or resolving inspection items may be worth thousands more than attempting to negotiate additional dollars and potentially killing the deal. Economists also anticipate that the U.S. residential real estate market will remain sluggish over the next several years. They believe interest rates will likely stay high and there will be limited price appreciation. This does not appear to be the type of economy that rewards stubbornness.
This is also why flexibility is not weakness. It is strategy.
Flexible buyers are not the ones that agree to everything. Flexible sellers are not the ones that cave. Both know where to draw the line.
The real estate decision making process involves more than just price. Timing, monthly costs, risk, property condition, and how easy it is for buyers to move into their next stage of life all factor in. There are times when the best option is not to push harder but to make an adjustment that will help keep a promising deal together.
These trends also apply today as buyers face pressure from builders who use incentives, discounts, etc., to sell inventory due to affordability issues and weaker buyer traffic. These trends have already been passed down through the chain as buyers expect some type of discount or incentive for purchasing a new home (as indicated by builder sentiment declining) and also make sellers aware of how much of a concern monthly payments have for homebuyers.
Buyers that will generally do well in this type of marketplace have an established budget for what they can afford, identify their main needs, and recognize when a house is acceptable rather than ideal. Sellers that will most likely do well in this market are those that no longer attempt to demonstrate their home’s value exceeds its current market price and work at making it as easy as possible for the right buyer to accept the home.
That is what flexibility looks like in practice.
It suggests purchasers will accept more than their original price range to avoid waiting twelve months to find the ‘perfect’ property as the ideal opportunity may not exist. Sellers are beginning to understand that listing a home at a realistic price does not equate to “selling themselves short”, but gives the seller an opportunity to build momentum with potential buyers who are interested in purchasing a home. Both parties can see that making a good sale occurs when there is cooperation and compromise, and neither party jeopardizes this cooperation based on minor disagreements. This is happening today.
Not due to low barriers in the marketplace nor do people know everything about real estate. Flexibility allows individuals to adjust to the current marketplace, versus the idealized marketplace they would like to have.
EN
RU