Buyer’s Remorse Often Follows a Seller’s Market Frenzy!

I have read several reports about recent buyers developing “remorse” after moving into their new or “next” home. This is obviously sad but, as with past “seller’s markets”, it was predictable. Seller’s markets and buyer’s markets BOTH have their “downside”. The recent (and perhaps lingering) “seller’s market” is no exception.

Some sellers may regret having sold too quickly while others over-played their hand, expecting a better offer to come along. There is no guarantee of that happening! When the market cools, many owners are left owning a house they wish they had sold. When an owner wants to sell and buy, regardless of whether they need to sell to buy or are able to own/ “carry” two houses, the process gets a little more complicated. How do the two markets compare as far as price appreciation and “timing”? That is a topic for another day. My focus here is on the buying side.

Some buyers have regrets as well. When the number of buyers exceeds the number of houses available for purchase, emotions can lead to some “creative” ways to compete. Then, when cooler heads prevail, buyers may wonder what they did!

Let me look at that from two perspectives. If anyone would like to talk privately about their situation and how I can help them, please contact me at your convenience.

First, let me address this from a REALTOR’s perspective. We are advisors; the client/ buyer is the decision-maker. We “protect and promote” our client’s interest above all else. However, what can we do when our client does not follow our advice and wants to buy a property that we think may not be the best for what they have told us are their “needs and wants”? Some buyers want to hear our thoughts; others do not!

We have to be careful to avoid “steering” a client towards or away from something they think they want to buy. We must do as they ask and hope they don’t blame us as some may do when they find that their choice was not the best. That being said, a bad choice is not likely fatal, meaning it can be addressed.

Second, from the “new owner’s” perspective, what do you do if you find yourself in a predicament? Can you resell the property? That depends on market values and when you bought it: has the market continued to rise or has it bottomed out? Can you afford a financial loss? If there are repair issues, was there a property disclosure issue? Unfortunately, if you find that a house does not meet your needs or if something “better” comes along, that is the chance every buyer takes.

Going forward, the best I can do for any buyer-client is provide the game plan that has worked for me for 26 years and hope that my clients do the planning and preparation that their biggest asset and largest investment demands. This is NOT a “retail transaction”. For better or worse, there are typically a number of “steps” that provide the opportunity to revisit and reconsider the decision to buy.

Buying Real Estate is, at its core, an emotional decision justified with logic. People will do as they will do. I have found myself assisting a number of sellers who told me that they never should have bought their house. I have helped buyers struggling with which house to buy, some of whom wanted to “jump in” before they were really prepared to move forward.

Overpaying for a house often works itself out over time. Buying without seeing a house first may be able to be undone before settlement. Buying without inspecting? That may be hard to overcome! Hopefully a buyer has not combined any two or even all three of these “risks”. Easier said than done: a “frenzy” can cause some to make bad decisions.

Hiring a professional with experience, training and education should provide the knowledge and insight required for such a big decision. We have done this before.

As I always say,

There is no time for inexperience, empty promises OR false expectations.

HIRE WISELY: We are NOT “all the same”!

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The 2022 Real Estate Market: Bubble or Not?

I listed and sold Real Estate during the build-up to the crash of 2008. I contend that this market is NOT the same. Let me explain.

Google defines “bubble” as a good or fortunate situation that is isolated from reality or unlikely to last. Good? Fortunate? That depends on your perspective which makes the definition vague, allowing people see both markets as more similar than they are.

Whatever you think caused the crash in 2008, I will focus on my personal experiences. Starting around 2002, the specific months and years involved varied across the country, interest rates dropped dramatically to generate buyer interest. Interestingly enough, the rates that created that heated market were very much like what we see today which has many complaining about rising rates. How is that for perspective?

In addition, and very troubling, lending standards loosened dramatically. The changes included a reduction in the minimum credit score required to “qualify” for a loan as well as increased ratios, meaning that prospective buyers could use more of their gross and net income to buy Real Estate. Ever hear the phrase “house poor”? Let me digress for a moment.

I have always asserted that the smartest people on the planet worked in finance of some sort. Not to disparage other professions but it is impressive to see how financial people use data to make decisions. I wish “analytics” in sports were as good but the issues with them likely relate to who is using them.

Here is my point. Lenders are NOT in business to loan money. Nor are they in business to turn down “credit worthy” borrowers:  there are no awards for “most declined business”! Lenders are in business to MAKE MONEY plain and simple and they do that by lending money to “credit worthy” borrowers. Many companies quickly sell their loans as investments in the borrowers using the Real Estate as collateral if the borrower defaults. They do NOT want to evict people to take ownership of the Real Estate. Doing that, in addition to the emotion of displacing homeowners, is costly and time consuming, perhaps costing them tens of thousands of dollars and the properties are often in disrepair.

There are two major components to making loans. First, the prospective borrowers must demonstrate their “credit worthiness”. Many joke that lenders will only lend money to people who can prove that they do not need the money. Anyway, lenders use “metrics” to assess how viable a prospect is. I do not know how they determine the “benchmarks” they use but do not believe that they intentionally discriminate although I am sure that some people let personal bias affect how they do business. Others may commit fraud to enrich themselves. I will focus on how things are meant to work. The standards are the same for ALL people as far as I know so, just because one group seems disadvantaged by the metrics, does NOT prove anything wrong happened. That is a lesson I think many need to learn.

The second component is an appraisal of the property to ensure that the lender is making a smart investment and, worst case, can recover their money should the borrower default. I have heard of issues where some allege that specific groups suffer bias with appraisals but think some of that may have more to do with location, features and condition rather than simply assuming that appraisal issues relate to the owners or prospects but that is a subject for another day.

During the years 2002 through 2008, it seemed like many borrowers with lower credit scores AND

higher “ratios” than used historically were buying homes. The “ends seemed to justify the means” and helped sell a lot of houses, enriching many. It also seemed like every sale was a “new high” for the local market. Then, the market hit a wall. It was destined to happen sooner or later regardless of what many thought. How many sellers turned down good offers, assuming others were coming. How many buyers thought they could delay buying waiting for something better? Delaying likely benefited buyers more than sellers unless the buyers were truly able to finance and own Real Estate.

Unfortunately, many borrowers were sold “adjustable” interest rate loans to “qualify” with little consideration about what would happen when their interest rates reset to higher fixed rates. In addition to the revised lending standards proving problematic, this change led to many new owners being unable to continue making their monthly payments. The new word of the day was “short sale” where owners were allowed to sell their houses even though the proceeds were not sufficient to pay off the debt. It was preferable to “foreclosure”.

As far as the effects on the Real Estate market, they happened in stages. Early on, many houses that had not sold earlier were now selling and many new buyers were able to achieve the American Dream, if only for a short time. The initial reaction was a surge in buyers, clearing out our prospect “pipelines” as many who had been “waiting” to buy jumped off the fence.

Then the market shifted:  the imbalance of new buyers and “For Sale” houses created stiff competition and drove prices up. It reached a point where the combination of historically low interest rates and historically high selling prices resulted in monthly payments similar to what would have occurred with “normal” interest rates and selling prices. However, the major difference was that you could re-finance a high interest rate but NOT a high selling price. While sellers continued to achieve great results, buyers were being impacted. Once adjustable rates started to reset to higher fixed rates the market came to a screeching halt. If you look at statistics in my market for 2008 and 2009 you will see a precipitous drop in prices.

The “bottom line” is that the 2002-2008 market was leveraged with many instances of bad financing decisions resulting in the “bubble bursting”. The “irrational exuberance” of many buyers hurt them for many years to come. As recently as a few years ago I was still meeting sellers whose property values were well below what they had paid years before. Some refused to sell for less than what they paid even though they had a lot of equity while others had used their home’s equity like an ATM and simply owed too much to try selling. There were many lessons to be learned, but did we? I still hear talk about trying to get more groups involved in home ownership. That is great but the devil is in the details and the end does not justify the means! Instead of lowering lending standards, focus on why some people have issues with credit scores, managing debt and earning a good income. Raising the minimum wage was not a viable answer either and the effects are starting to become apparent!

The current market, while some may assume it meets the Google definition, has some similarities but a very different “cause” and likely a different outcome. The pandemic suppressed inventory levels. Some sellers did not want buyers coming into their homes. Some were financially affected by the lockdown and could not buy their “next home”. Many buyers were reluctant to visit homes or were also financially impacted. However, many buyers were still looking even though inventory levels were low. The imbalance created a serious sellers’ market resulting in intense competition and huge price surges. That being said, it “appears” that these buyers were financially qualified although I cannot state how valid appraisals are in a market like this as no one has a crystal ball. At some point pricing has to stop rising and perhaps start to decline, doesn’t it?

Assuming (and hoping) that the typical new owner is able to make their monthly payments, I wonder how many will suffer repercussions such as “buyer remorse” if they bought “sight unseen” and/ or without inspections? How will what they paid impact their future decision-making if they think about moving? A major difference between markets is that we are not seeing “short-sales” and “foreclosures” resulting from loose lending standards. While both outcomes will always occur, the current causes have more to do with the overall economy.

There is a lot more to what caused these two similar markets and it remains to be seen what evolves in the next few years. As far as whether the current market is a “bubble” or not depends on how you define the term. To me, there is quite a difference between lowering lending standards so more people can become homeowners and what is happening today when buyers “seem” financially qualified even if paying over asking price and being extremely creative to gain a competitive advantage. Even if sales prices tumble, which they may as some owners enter the picture after the pipeline of buyers has dried up, to me that is more like a “stock market” correction and not a “bubble” based on faulty underpinnings.

Semantics? Perhaps but I have heard too many equating the two markets. While I respect and understand buyers expressing concern about buying Real Estate today, wondering if prices are sustainable, there is never a guarantee that Real Estate prices will appreciate in a straight-line, if at all. Look at the stock market regularly and you will see this in action. There is always risk in ANY “investment” but what are the alternatives? If you are renting, is that a more prudent bet than owning? You will never recover your rent payments and they continue for as long as you rent. If you have delayed your plans to move, what is the cost to your personal happiness and any other factors impacted by your staying put wherever you are?

Buying and selling Real Estate are personal decisions that deserve a lot of consideration. This type of market does not typically offer time to decide. These are emotional decisions justified with logic. Planning and preparation are critical even if the time available is shortened. The time to plan and prepare is not after you find a house you think you like but are stuck watching someone better prepared buy it. Start before looking! Some lessons from the real “bubble” should be helpful.

Contact me in 5 or 10 years and we will have a clearer picture of what happened!

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not “all the same”?

Delaware County PA June 2021 Residential Housing Market Update

Tri-County Suburban REALTORS and Showing Time have released their June 2021 Local Market Insight report for single family homes in Delaware County Pennsylvania.  The report uses Bright MLS statistics.  If you would like more information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

The Real Estate market continues to recover from the pandemic shutdown and resulting economic impact.  As always, your experience may differ depending on your location and how you have been personally affected.  As I always say, the decision whether or when to sell or buy Real Estate is a personal one influenced by a number of lifestyle factors and external variables.  The past year or so typifies that.  Some have not been deterred causing a frenzied sellers’ market while others have decided to delay their plans to sell or buy.

The report compares current month and year-to-date results to one-year ago.  We are past the halfway point but the statistics continue to include pre- and post-pandemic time frames so it is not a true “apples-to-apples” comparison.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary greatly from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market any more than there is a national weather forecast so, if you are thinking about selling or buying, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market as well as provide you with the knowledge and insight to help you decide what works best for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are stale.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date Bright MLS information.  Even then, while a sale may be reported as having settled or closed recently, the real question is when was the offer negotiated?  Typically, sales can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  This is especially true as market conditions change.  Up-to-date information, even if not perfect, is important!

As far as the statistics, please remember that these numbers include a variety of single-family homes throughout the County.  There were 1003 new listings in June 2021 compared to 880 in June 2020, an increase of 14%.  YTD 2021 shows 4802 new listings compared to 3800 in 2020, an increase of 26.4%.  The 5-year June average is 906 new listings.  There were 665 active listings in June 2021 compared to 875 in June 2020 with a 5-year average of 1477.  Inventory levels continue to rise but the “Months of Supply” is below one month at .7 which is down 70% compared to last year.  There were 908 closed sales in June 2021 compared to 408 in June 2020, an increase of 122.5%.  YTD 2021 shows 3699 closed sales compared to 2555 in 2020, an increase of 44.8%.  The 5-year June average is 756.  The median sold price was $290,000 in June 2021 compared to $259,500 in June 2020, an increase of 11.8%.  YTD 2021 shows a median sold price of $265,000 compared to $235,000 in 2020, an increase of 12.8%.  The 5-year June average is $256,250.

Here are two other interesting June 2021 vs June 2020 statistics:  (1) the Sold vs. List Price Ratio was 102.4% compared to 97.1%; (2) the average Days on the Market was 13 compared to 38.  As usual, properly priced houses are selling fast and achieve more than their asking price.

How you interpret all of this information and data is subjective, meaning you can draw a variety of conclusions and then make decisions based on what you think.  Does it make you any more or any less likely to want to sell or buy?  If you are thinking about selling, know that history suggests that markets change suddenly.  Some will try to “time the market” and get as much as they can.  Many owners still regret not selling during the last seller’s market.  Some waited too long and prices fell or they wanted too much for their house.  If you are thinking about buying, do you worry about prices continuing to rise, do you worry about overpaying or are you waiting for prices to drop?  How many wish they had bought months ago?  If you need or want to sell one house to buy another, this can get even more complicated as you try to coordinate two processes.

All of this underscores the need to work with a professional.  The internet and advice you get from family, friends and the media is likely very general and subjective.  In my opinion, much of the well-reported “frenzy” created erratic behavior.  Assuming buyers did what they thought or were told they needed to do to “win”, even without really knowing if others were bidding on the same house, do they or will they regret their decisions?  Many agents will tell you that they are shocked by buying “sight unseen”, waiving inspections and going well over asking price.  I have no doubt that we will be talking about this time period for years to come.  I hope that it all works out as the market stabilizes and then shifts into a buyer’s market.  Only time will tell.

What about the properties that did not sell?  Many came off the market and remain unavailable.  Did owners delay, change or give up their plans?  While buying activity has generally been strong, some sellers are reluctant to allow showings or may have issues holding them back.  Given the statistics, are people making an informed decision or reacting to what they “think” is happening in their local market?  A brief conversation may be very helpful if you have any questions about selling or buying.

Anyone thinking about selling or buying needs to understand their local market and decide how to react to it.  The effects of buying and selling remain for years as does inaction.  These are important decisions and likely require the knowledge and insight that an experienced, trained and educated professional can provide.

I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they keep it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

No matter how good the market may appear, every house will not sell.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”, whatever that means today.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their local market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a property was available to look at or purchase.  Some buyers may make an attractive offer just to control the process only to have remorse later as inspection results are revealed or they see another property they prefer more.

Some buyers may not be willing to look at houses priced high compared to the rest of the market:  why try to negotiate a price down when other similar properties are available at more competitive prices or others offer more for the same price?  Many sellers open to negotiating their price will never get the chance.  I will be happy to discuss specifics with you.

Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment.  There are always opportunities out there.  As with the stock market, it is very difficult if not impossible to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  Getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  Please do not wait for what you think is a better or the best time to start.  If you need to sell in order to buy, let’s have that conversation.  Now may be the best time to start planning.

There is no time for inexperience, empty promises or false expectation!

HIRE WISELY: We are not “all the same”!

My Buyer’s Offer Did Not Get Accepted: What Can They Do? Part 4 of 4: The MLS, Seller and Listing Agent.

Whether you are starting the process of buying your first or “next” home, engaged in the process of house-hunting or you have already been denied a house you really wanted to own, I want to share some time-tested advice.  I am going to address the main question in three parts.  This is not intended as legal advice and not intended to interfere if you have an existing business relationship.

Let’s start with the premise that you have made an offer and it was rejected.  You may have had no response or you may have been given an opportunity to negotiate that did result in a signed contract.  If a buyer makes what they think is a reasonable offer and the seller did not accept it, they should have no regrets.   Easy for me to say.  However, did the buyer have the right expectations and understanding about the process?  Could or should their agent or the listing agent or the seller have done anything differently?

If the seller was given the opportunity to review all offers and was properly informed of any possible interest that could generate additional offers and they accepted what they thought was the best offer, who has any reason to complain about the process?  Every executed agreement will not close so it may be best to remain on good terms with everyone involved.  You may get another chance to get a house you want to own, if you want one, but do not assume you will.

I provide my buyer-clients with a few pearls of wisdom I have gained through experience, training and education.  The process of buying or selling Real Estate is typically an emotional decision justified with logic.  It should be treated as “business” and not taken personally.  It is also not retail.  Looking for a house can be a full-time job but it is worth the investment of time and effort.  Your life will get back to normal after you succeed.  Bad decisions are costly and their effects can last a long time.  Real Estate is typically our biggest asset and requires our largest ongoing investment so buying or selling it deserves a lot of attention.

I have already discussed how a buyer might manage their search and making their offer in a previous post.  Those are both important but there is more work required to get the house you like under contract.  Respectfully, you may have had the best planning and preparation and made your best offer but there are still two potential obstacles to having a signed contract:  they are the listing agent and the seller.

As a buyer agent, it can be very frustrating just trying to show properties to our clients.  Add to that possibly waiting for a buyer to decide if they want to make an offer, their trying to assess how to do that and then trying to ensure that your buyer’s offer is properly presented to the seller.  My intent is not to criticize acceptable business models but I do question some business practices.  Article 1 of our REALTOR Code of Ethics requires that we protect and promote the interest of our clients and that we be honest with others.  Not all Real Estate agents are REALTORS.

The MLS has rules and regulations which member agents are required and expected to follow.  Listing statuses and their definitions are a major part of them.  For example, Bright MLS requires that properties are listed in the MLS within three business days of having an executed listing contract and within one business day once it is advertised if not already uploaded to the MLS.  There is status called “Coming Soon” which offers agents an opportunity to advertise properties before any showings are allowed.  There is a publicized date when showings will start.  Those dates change so buyer agents need to monitor them as they should when a listing agent specifies when offers are due and going to be presented to sellers.  There is no rule that you cannot submit an offer sooner than required or that you can’t have it “expire” before they intend to present it.  Obviously your buyer must agree with what you do.

The “Coming Soon” status can be effective with generating interest but frustrates some waiting for showings to start.  Listing agents and sellers tend to like this status as it can reduce the actual marketing time while maximizing competition and the selling price.  Buyer agents and buyers are less enthusiastic.  Should a buyer wait to make an offer on another house, especially if the listing agent of a “Coming Soon” property has not shared pictures or provided a decent write-up?  Is this property better than what they have already seen?  Competition and a lack of knowledge can create anxiety.  However, a major concern is that some listing agents may be allowing some people to  see inside, against the rules, while others are left out.  Some buyers are willing to make offers “sight unseen”.  However anyone views that, it is perfectly fine even if some refuse to do so.  Some think it “unfair” and risky.

Some agents have suggested eliminating this status saying that a property is either “active” and available for showings or it isn’t.  I can see their point but I do not agree.  Even now, some houses are listed as active and immediately placed “under contract”, suggesting that it never got full market exposure.  I think the issue is how the status is handled and that is a “people problem”.  There is no perfect system.  What guarantee is there that every interested buyer would be able to see every “active” and available house?

If you were going to design a perfect, “neutral” system, meaning it levels the playing field rather than favoring or potentially harming buyers or sellers, several things would have to be in place.  I will suggest a few although many will see the folly:

1. Perhaps no showings should be allowed until a property is “active” in the MLS.  PERIOD.  This makes sense but how do you implement it or prove it was violated?
2. Once “active”, a property should be kept available for showings and offers for some “reasonable” amount of time to allow any interested buyer and their agent an opportunity to visit and make an offer.  In theory, this should maximize the selling price but some sellers are more interested in a quick sale.  Only a seller gets to decide what is in their best interest and which offer to accept.  Either way, there is no way to force this on a seller.  What about buyers unable to see a house for whatever reason?  Even then, how do you know that your offer was properly presented to the seller for their consideration?
3. All listing agents should be required to use a third-party showing service to schedule appointments.  I have had to call listing agents to schedule showings on numerous occasions.  That tends to take longer as far as getting an answer and a confirmation than contacting an appointment scheduling service.  Are these listing agents too busy to promptly respond or are they trying to keep out competition, hoping to sell their listings to their own buyers?  I do not know but that is the suspicion.  Calls for showings can go unanswered for days.  Even worse, some listing agents, for whatever reason (some are valid!) need to attend showings.  A buyer and their agent should not have to work around a listing agent’s schedule.  Granted, they have to work around a seller’s schedule but it is the seller’s house.
4. Many agents have wondered whether their buyer’s offer was actually presented to the seller.  In PA we have forms which attempt to document that an offer was presented but you never really know.  I once had a sealed offer returned to me unopened.  That buyer never had a chance to compete.  In multiple-offer situations, I have been told by several agents that their seller-client reached a point where they wanted to stop looking at additional offers that they had in front of them.  I do empathize!  The real question is how many offers is too many to open, evaluate and compare?  My experience has been that after awhile the offers tend to seem very similar but you never know about any offers you do not actually look at.  What about the time and effort the agent and buyer took to see the house and prepare and deliver an offer?

The bottom line is that we have to rely on and trust each other to do our job.  Technology has made our job easier as far as creating, executing and delivering paperwork than in the past but you still have to print them out and look at them.  Some buyer agents do not submit complete packages.  Some use formats that are difficult to work with.  Do all agents really explain what their clients are reviewing and signing?  Do our clients really understand the paperwork and their potential obligations?  Electronic signing and delivery have made life easier but it has also increased the possibility of a client not fully understanding what they are doing in a rush to sign documents.  Can Real Estate really be conducted electronically instead of face-to-face, at least for major documents like representation agreements and agreements of sale?

My best hope is that a seller hires an experienced, trained and educated agent that has the ethics and integrity to do their job and that a buyer does the same.  If they have both hired the same agent, that is fine but that creates an inherent conflict called “dual agency”.  If, as is more likely, they have hired separate agents, my best hope is that they do everything in their power to promote and protect the best interest of their client while being honest, at least as allowed by their representation agreement, with everyone else.

The simple facts are these:

1. houses will come on the market.  They may or may not be overpriced or poorly marketed which could prevent their exposure to the full market which can lower activity and selling prices;
2. some buyers will miss opportunities because their search criteria do not “capture” every real possibility, they simply miss listings as they rush through an email, they are not able to schedule a showing before a house sells or they are not in a position to make a serious offer for whatever reason.  Much of this falls on the buyer.  Many “shop” online for weeks before contacting a professional who can better explain the planning and preparation needed;
3. sellers may make it more difficult than it should be to see their house or they might be expecting too much from the market;
4. agents may frustrate their clients’ efforts to sell or buy.

There is a lot more to buying or selling Real Estate than marketing, showings and writing offers.  This is NOT retail!  There is no online “shopping cart” or a “Buy It Now” option.  Again, this is a business decision which is often emotional and justified with logic.  While the public has endless access to data and information, it takes an experienced, trained and educated professional to bring the knowledge and insight that Real Estate sales often require.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY: We are not “all the same”!

My Buyer’s Offer Did Not Get Accepted. What Can They Do? Part 1 of 4: Planning and Preparation

Whether you are thinking about buying a home, are actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is a broad topic with no “one size fits all” answers.  I strongly believe that planning and preparation will put you in the best position to identify houses that may interest you and, when you find one, maximize your opportunity to own it.  There are many variables in the home buying process, some of which you can’t control.  I encourage serious buyers to control what they can.

My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

Let me start with the premise that a buyer (or perhaps you) made an offer and it was rejected.  If a buyer makes what they think is a reasonable offer and the seller does not accept it, they should have no regrets.  Easy for me to say.  If yours was the only offer, I would assume that you had a chance to negotiate but that you could not reach a mutually beneficial solution.  If you were competing with other buyers, only one offer could win.  Did the buyer have the right expectations about the process and how it might go?  Could or should their agent or the listing agent or the seller have done anything differently?

If the seller was given an opportunity to review all offers and was properly informed of any possible interest that existed and they accepted what they thought was the best offer, there may be no valid  reason to complain about the outcome.  Every signed agreement does not close so you may get another chance, if you want one, but do not assume you will.  In fact, depending on the type of Real Estate market, you may want to assume that you will not have a chance to change your initial offer.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.

I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  The goal is avoid being teased or distracted.  They may not even be consciously thinking about buying a house.  If they are, most buyers want to jump right in.  Frankly, looking at houses and imagining “what if” is the fun part although that can “get old” really fast especially after an offer has been rejected or terminated.  Easier said than done but if they see something they like and want to schedule an appointment or make an offer without really being prepared, the “process” can be frustrating, especially if a better prepared buyer likes the same house. 

So what are the three things?  They are all part of the “planning and preparation” that any serious house hunting requires.  If you fail to plan and prepare, you need to be prepared to fail.  Is failure an option?  What constitutes failure anyway and what happens next?

The order may vary but here is what I suggest doing:

1. Hire an agent.  You want an experienced, trained and educated agent to protect and promote your interest throughout the process.  Sellers have an agent, so should you.  Hiring an agent includes related topics like understanding agency representation, contracts and the agreement of sale.  We do more than open doors and write offers.  You can find a lot of information about buying and selling Real Estate on my website AndrewWetzel.com.  Having agents you will not hire show you houses can be a problem, especially if you find the right house with the wrong agent.  I understand that committing to one agent, especially at the beginning of the process, seems challenging.  Tell us your concerns and let’s have a conversation.
2. Get financially pre-qualified with a local, reputable lender.  Local and reputable are important.  I believe that only a live person can provide the information and service you will need.  Be wary of online offers, advertisements and “teaser” rates.  They may be “too good to be true”.  The interest rate is important but what are the total costs?  Do NOT overlook the quality of the service.  A serious buyer needs to know how much they can borrow, what it will cost them and, in some cases, whether they can actually get a loan.  Many buyers learn that they cannot get financing or that they need to do some work to get a loan.  It will be very frustrating if you learn either of these after finding the house of your dreams.  Some buyers may want to get a larger loan so they can buy a house they really like rather than settling for less.  Once you learn how much you can borrow, you need to determine your comfort level in terms of the monthly payment and your out-of-pocket expenses.  Knowing your comfort level will help determine the price range to search.  The type of market will complicate this:  is a seller’s asking price the “floor” or the “ceiling” for negotiating?
3. Determine your “needs” and “wants”.  What is absolutely NON-negotiable?  Locations, schools, the number of bedrooms and bathrooms and other factors are important for most buyers.  “Quality of life” issues require some investigating and that can take time.  What would be nice to have?  Needs and wants add cost to a purchase.  Some buyers need to consider “trade-offs” or reducing their expectations while others can add to their “wish list”.  Your search criteria may change but you need a starting point to focus your attention.

Once you have managed these three, you can set up a search, start reviewing the possibilities and take action to own your “dream house”.  If there is competition, there is little time to waste getting into houses or making a decision.  Of course, if you have already started looking, you may have a search set up.  Now would be a great time to re-evaluate the search criteria. 

In part two, I’ll discuss the search for your first or “next home”.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

My New Audio Course is LIVE on Listenable.io

I received an email from the staff at Listenable.  They provide an online platform that offers “powerful, bite-sized audio courses authored by well‑loved experts”.  They said:  “Congratulations on launching your first course on Listenable!  We’re excited to have you on board!  We sincerely appreciate the work you’ve done to create such an outstanding course and we are proud to have you on the Listenable team.”

I am happy and excited to add my content to their impressive lineup of courses.  The title of my course is “The Basics of Selling Residential Real Estate”.  Why did I create it?

My passion for Real Estate led to my writing blogs and recording podcasts.  Someone at Listenable heard my podcasts and contacted me to ask if I would be interested in creating an audio course for them.  The subject matter was up to me and this topic seemed an obvious choice.

As I have learned over the course of my career as well as through my involvement in various roles within the Real Estate community, Real Estate is not rocket science by any means although many make it far more complicated than necessary.  The process of selling or buying residential Real Estate generally involves a number of basic steps that must be completed in order to succeed.  Hiring a professional should increase your chances for success.  Our experience, training and education can provide the knowledge and insight typically needed to navigate the home selling or buying process.

My course consists of 13 lessons averaging about 8 minutes each.  I break the steps of selling Real Estate down into “the basics” and explain what we do and why we do it.  My goal is to take some of the mystery out of what people think we do and clarify it so that the typical listener will be more comfortable with the process.  I discuss the entire selling process from hiring an agent through settlement/ closing.  I hope that you will listen to it and recommend my course to people you know.

Here are the lessons:  The “Five Steps to Selling Real Estate”; Hiring an Agent; Preparing Your House for Sale; Marketing Your House to Sell; Pricing Your House to Sell; The Listing Contract; Your House is on the “Active” Market; Congratulations, You Have an Offer; Contingencies; Closing the Sale.  I included two “bonus” lessons:  Andrew’s Time-Tested Real Estate One Liners and The Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS.

Here is a direct link:  https://listenable.io/web/courses/380/the-basics-of-selling-residential-real-estate/   To enjoy14 free days of Listenable, use this link:  https://listenable.io/?rf=CMO1BEOO

I have an extensive catalog of blogs and podcasts posted on several websites including my primary site AndrewWetzel.com.  If you haven’t followed them, I encourage you to give them a try.  If you have read and listened to my material, thank you.  I will keep adding new content.

Best wishes and thank you for listening and reading!  As always, I am a phone call, email or text away if you have any questions.

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same.

Should a Buyer Agent Represent Two Buyers Bidding on the Same House?

This is a question that most agents and buyers never really have to think about.  How often does this happen?  I like to raise the question in my ethics classes for these very reasons.  Once people do think about it, it can generate a lively theoretical discussion which generates emotion and opinion.  I am not sure there is a perfect answer but I think it has so many aspects to it that it is worth discussing.  Better now than in an ethics hearing.  Let me start with some disclaimers.

First, this is my opinion and not intended as legal advice.  Second, I am in PA where this practice is not considered “dual agency”.  In fact, our contracts specifically allow this to happen which I will discuss later in further detail.  However, it is considered “dual agency” in some states which makes me wonder why, how can that be:  it either is or it is not “dual agency”.  How can it be looked at differently in different states?  If it were considered “dual agency”, which is not allowed in some states, that would at least provide some direction as to how to handle it and remove my concerns.  Third, my intent is not to interfere with any existing business relationships although I would respectfully suggest that buyers should know if this situation might come up so that they can make an informed decision before entering into a business relationship that might not work for them.  In PA many agents refuse to act as “dual agents”.  I wonder how they view this topic?

I am an analytical thinker so I will look at this from several perspectives.  Let’s start with some contract information, meaning some language that a potential buyer-client should know before hiring an agent to represent them.  This assumes that a buyer hires an agent and actually discusses their respective roles.  Of course, if an agent does not follow our rules and regulations, a member of the public may not be as well informed as they should be.  While well over 90% of the public searches online for Real Estate listings and information, I do not believe that most really understand agency representation.  We do more than open doors and write contracts.  Do prospective buyers know what to ask agents they might hire?  Are they resistant when an agent tries to do their job by discussing contracts and agency disclosures?  I am going to talk about this from the perspective of being a REALTOR, not just a licensee.  This means I will refer to out REALTOR Code of Ethics as well as our state’s “standard forms”.

Article 1 of our REALTOR Code of Ethics requires that we protect and promote the interests of our clients above all else.  While we are required to have a business relationship contract with someone to represent them as our client, rather than as our customer, that is not always the case and not having a contract is not an excuse when a problem arises.  What is important is what a buyer thinks of our relationship.  Our conduct may convey a perception that they are our client when they are technically not.  That poses potential problems and it likely means that they know less than they would have had they seen the proper forms.  This Article brings up the topic of fiduciary duties which I will discuss later.  These are owed to a client but not to a customer.

Article 2 states that “REALTORS shall avoid … concealment of pertinent facts relating to the property or transaction ….  REALTORS shall not, however, be obligated to …  disclose facts which are confidential”.  This Article brings up the topic of confidentiality which I will also discuss later.

In PA we have a form called a “Consumer Notice” that all licensees are required to present and explain to any member of the public before having a “substantive” discussion with them, referring to their “needs and wants”, and entering into a business relationship.  It describes the different relationships available as well as reviewing a number of agency/ representation-related issues. 

Under “Buyer Agent”, it says that we “work exclusively for the buyer”, that we “must act in the buyer’s best interest” “and must keep all confidential information, confidential”.  I mentioned a relationship called “dual agency”.  This occurs when an agent or Broker “works for both the seller and the buyer” in the same sale.  As stated in our Code of Ethics, this relationship requires “full disclosure to and with the informed consent of both parties”, meaning in writing, before acting in that capacity.

The Consumer Notice also includes several other important details.  All agents “must disclose, as soon as practicable, all conflicts of interest”.  A dual agent may not take any action that is detrimental to either party.  In a typical seller/ buyer scenario that is perhaps best explained by saying that a dual agent cannot disclose how low a seller will go or how high a buyer will go in their efforts to sign an agreement of sale or negotiate details later such as inspection issues.

Based on what I have presented so far, my non-legal but educated opinion is that representing two buyer-clients bidding on the same house seems like “dual agency” to me.  Again, I do not understand how some states see it that way while others, including PA, do not but I think that there is no harm in treating it as “dual agency”.  I have never heard a client complain that their agent over-protected their interests, have you?

Now let’s discuss “fiduciary duties”.  Working with a customer, meaning there is no contract, has requirements.  Working for a client expands that list as there is agency representation and six fiduciary duties.  The list includes:  obeying a client’s lawful instructions, being loyal to their purpose or goal, disclosing what you know that could help them succeed, keeping their information confidential, being accountable for keeping them on track with what they need to do throughout the process and providing reasonable care and diligence in your representation to protect them.  There is much more to these duties but imagine representing two buyers with similar intentions.

In a “dual agency” relationship two of these fiduciary duties are compromised or negated:  you cannot disclose to one party what the other party wants kept confidential.  This does not refer to “material facts” that must be disclosed if known.  It does refer to things that could hurt someone’s negotiating strategy.  A critical question is what is meant by confidential?

A listing agent can share details about an offer presented to them by one agent with another agent.  Many agents and consumers do not know that.  This is another topic that gets my classes going!  Absent a previously signed “confidentiality agreement”, such as is often used in commercial listings, the details of an offer are not inherently private and can be “shopped” to get a better offer.  Of course, this does not include the buyer’s name or personal information.

That being said, some people are very private and consider things “confidential” that others may not.  Learning this is part of getting to know your client.  Do you see how this can impact having more than one buyer client interested in the same property?

In PA we have two different buyer representation contracts, one is “exclusive” while the other is “non-exclusive”, the difference being whether a buyer works solely with one agent or has more than one agent assisting them.  That alone can present issues but is not my point here.  Unfortunately, some agents do not present either form to their prospective clients or they do so at the point of creating an offer on a property.  Better late than never!  I know that some clients are resistant to signing contracts or they may be willing to be a customer rather than committing to one Broker/ agent and getting the benefits of full representation.  However, there is important information they need to know and an executed contract proves they were at least informed of this information.

In both the exclusive and the non-exclusive contracts, there is the same language regarding issues related to conflicts with two clients.  They both say that a “Broker may not take action that is inconsistent with a buyer’s interest”.  They both say that an agent “may show the same properties to other buyers and may represent those buyers in attempts to purchase the same property that a buyer wishes to purchase” and that doing this is not a “breach of duty”.  They both say that “It is a conflict of interest when a Broker … cannot put a buyer’s interest before any other”.  “Unless permitted by a buyer or required by law, a Broker will not knowingly reveal or use any confidential information of a buyer”.  However, it does not specify what the word “confidential” mean.  It does talk about not treating the “existence, terms or conditions of any offer as confidential unless there is a confidentiality agreement” but the sentence ends with “between a Buyer and the seller”.  I guess the word “exclusive” only works one way, meaning that the buyer is restricted to one agent but the agent is not restricted to one buyer.

Then both contracts go on to say that “it is a conflict of interest when a Broker or licensee … cannot put a buyer’s interest before any other”.  The section concludes by saying that if there is a “conflict of interest, the broker will notify the Buyer in a timely manner”.  How does all of this sound to you?

These are not guidelines or suggestions, they are rules.  How do you accept all of these rules and properly manage the home searches of two buyers who want to pursue the same house?  Of course, if two or more buyers are looking in different areas and price ranges this may never be an issue.  But buyer’s plans change.  Many buyers end up buying a house vastly different from what they said they wanted.

I am not an attorney but these sections seem to conflict, don’t they?  Wouldn’t having more than one buyer interested in making an offer on the same house be about as conflicted as it gets?  While the rules say that an agent must mention having a conflict, it does not elaborate.  Do I need to do more than say “I have a conflict”?  Can I say what the conflict is?  Here is the best part:  to whom do I mention the conflict and what is the remedy?  Do I tell both buyers?  Can I just end my relationship with one of the buyers and keep working for the other?

That raises an interesting question:  who is allowed to terminate a contract?  While I could have another agent take over with one buyer, I think that poses a problem as I would still know information about that buyer that I would not normally know and that could harm them.  In fact, when agents encounter problems with seller/ buyer dual agency, I suggest that they completely remove themselves from both client relationships to avoid any perception of problems with disclosure or confidentiality.

As with all Real Estate paperwork, the buyer contracts do encourage the prospective client to seek the services of an appropriate professional, such as an attorney.  While that makes sense, is there time to do that?  If a buyer has done as I suggest, all of this would have been taken care of before I showed them any houses.  Conflicts that arise after that may not be able to be undone and it could impact a buyer’s opportunity to make an offer and get it signed.

Let’s drill down further to the real issue.  Aside from whether one agent can truly best represent the separate but conflicting interests of two different buyers, remember that only one buyer gets the house, does the agent have the right to tell each buyer-client about the other’s interest in the same house?  Does doing that conflict with the fiduciary duties owed to each buyer-client?  What is the goal?

I have had agents tell me that they want to be “fair”.  Really?  Who gets to decide what is “fair”?  What does that even mean?  The REALTOR Code of Ethics used to have that word in Article 1:  it said that, while we had a duty to protect and promote the best interests of our clients, we had a duty to treat people fairly.  If you are a sports fan, what is fair?  Is a pitch a ball or strike?  Did a referee miss a penalty or make a bad call?  The word, however nice it sounds, is confusing because it is unclear.  Do any two people, especially those working on the same sale, define the term the same?  Again, only one buyer can win.  Perhaps neither buyer will succeed but that does not mean that all is well.  Anyway, the Code of Ethics was amended years ago to say that we have to treat people honestly.  I’ll leave that alone but telling two buyer clients about the interest of the other is not a measure of honesty to me.

Years ago I had an agent in my office show one of my listings.  They brought me an offer which was negotiated, accepted and signed.  When I called to tell them that it was signed by my seller-client they made a very unusual request of me:  they asked if I would enter my name in the MLS as the buyer’s agent.  I asked why and was told that this agent had sent the same property listing information to four different clients but only one seized the opportunity and quickly got the house under agreement.  The agent was concerned that the other three would blame them for not telling them what had happened.  I commended this agent for what they did!  I can’t imagine what might have happened had they shown the house to the other clients and written and negotiated multiple offers on the same house.

The question then becomes what happens next?  Let me explore a couple possibilities.

• If neither buyer gets the house, there may have been no harm done but the question of whether our actions are ethical or professional is based on our conduct and not the outcome.  “No harm, no foul” is not the measure.  Did our actions possibly cause both buyers to lose a sale?
• Suppose one of your two buyers wins.  Did they improve their offer because they knew they had competition?  If so, did they spend or do more than they really had to and might have done if they did not know?  Did the other buyer hold back or drop out because they felt they could not win?  Some people want to compete, even if they overdo it, while others will not compete even if they might succeed.  Saying that both buyers knew that other agents had interested buyers does not change my opinion.

To conclude, there is a lot to what seems like a simple question.  Ultimately, it “appears” that our forms and contracts allow us to represent more than one buyer interested in buying the same house but I am not sure there is sufficient guidance as far as what to do when this situation comes up.  I have disclosure and confidentiality concerns.  I think each client should be allowed to make that decision.  I would guess that both would like to know about the other even if wanting their own interest kept quiet.  Suppose one cares and the other doesn’t?  Is it fair for one to know but not the other?  There is that word again, “fair”.  Trying to work this out once the situation comes up is too late. 

Let me add two thoughts.  First, this is not the same as a listing agent sharing the details of your client’s offer with another agent or having them let you know that other agents have made offers on a property that interests one or more of your buyer clients.  You must tell them that information.  However, you have no fiduciary duty to the listing agent, the seller or any other agent’s buyer clients.

My second thought is more of a question.  Suppose you write and present an offer for one buyer-client and it is rejected or countered without leading to having a signed agreement of sale.  Do you have the right or authority to tell another buyer-client the details?  While telling them what did not work with one buyer-client seems to make sense, perhaps that offer would work now if no one else has made a better offer.  Seller expectations do change.  Does telling another buyer how the seller countered an offer accomplish anything?  There is no guarantee that the seller would still be interested in that amount with a different buyer-client and, if the market is competitive, your current buyer client may only get one chance to make an offer.  Suppose you tell them a number and they lose.  An offer is more than the price and two buyers offering the same number may have very different terms and conditions.  Suppose the buyer-client whose offer failed decides to make another offer?

I am not trying to scare anyone but, if nothing else, I hope that people who read or listen to this will better understand how Real Estate works.  It is not retail where everyone is able to buy a product for a known price and there is ample supply.  Again, we do so much more than open doors and write contracts.  Real Estate requires experience, training and education.  It is not for everyone and it can get more complicated than it needs to be at any given moment.  Life would be easy if sellers would just accept their asking price or if buyers would just offer the asking price when they make an offer.  Of course, both of those statements are unrealistic if not ridiculous.  If they were true, you wouldn’t need a professional!  This is EXACTLY why I end my blogs and podcasts like this:

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

Delaware County PA January 2021 Residential Housing Market Update

Tri-County Suburban REALTORS and Showing Time have released their January 2021 Local Market Insight report for single family homes in Delaware County Pennsylvania.  The report relies on Bright MLS statistics.  If you would like more information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

The market continues to be affected by the pandemic and resulting economic impact.  The weather has also been a factor.  However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision whether and when to sell or buy Real Estate is a personal one influenced by a number of lifestyle factors and external variables.  The pandemic typifies that.  Some have not been deterred while many others have decided to delay their plans to sell or buy.

The report compares current year-to-date results to one-year ago, same time period.  This report only covers one month so I would not over-react to the information.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary greatly from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate marketany more than there is a national weather forecast so, whether you may be thinking about selling or buying, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market as well as provide you with the knowledge and insight to help you decide what works best for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are stale.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date MLS information.  Even then, while a sale may be reported as having settled or closed today, the real question is when was the offer negotiated?  Typically, sales can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 534 new listings in January 2021 compared to 586 in January 2020, a decrease of 8.9%.  The average number of active listings in January 2021 was 441 compared to 994 in January 2020.  Low inventory levels continue to affect the market.  There were 544 closed sales in January 2021 compared to 438 in January 2020, a 24.2% increase.  The median selling price was $240,000 in January 2021 compared to $202,000 in January 2020, an increase of 18.8%.  What effect did the large decrease in the number of properties being listed and available have on the market statistics?  It likely created some anxiety resulting in multiple offers, perhaps well over asking price, and buyers taking other actions to make their offers more competitive.  These include buying “sight unseen” and/ or waiving inspections.  The result was a huge increase in selling prices along with a large decrease in the Days on the Market (DOM) and the “Sold to List Price” ratio.  Do we really have an inventory problem or pent-up demand?  Time will tell.  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, the effects of what is happening remain to be seen.  Some buyers may come to regret a hasty decision to get a property under contract at “all costs”.  Buying “sight unseen”, especially without inspections comes with a risk.  Sellers and their agents need to consider how to manage such offers as they may have appraisal issues and/ or be more likely to result in buyer remorse.   Given the  expense and complexity of a typical Real Estate purchase, buyers and sellers need to fully understand what they are doing and what can go wrong.  Even with our property disclosure law in PA, many sellers either do not know about underlying issues with their properties or forget to disclose them.  Whatever your feelings about property inspections, they can provide important information to a buyer.  Getting a contract signed is only the first step to completing a Real Estate sale.

What about the properties that did not sell?  Many came off the market and remain off the market.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has generally been strong but some sellers are reluctant to allow showings or may have issues holding them back.  Given the statistics, are people making an informed decision or reacting to what they “think” is happening in their local market?  A brief conversation may be very helpful if you have any questions about selling or buying.

Anyone thinking about selling or buying needs to understand their local market and decide how to react to it.  The effects of buying and selling remain for years as does inaction.  At some point things will return to whatever is “normal”:  how many will regret not taking action?  These are important decisions and likely require the knowledge and insight that an experienced, trained and educated professional can provide.

I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they keep it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

No matter how good the market may appear, every house will not sell.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”, whatever that means today.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their local market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a property was available to look at or purchase.  Some buyers may make an attractive offer just to control the process only to have remorse later as inspection results are revealed or they see another property they prefer.

Regardless of the amount of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market:  why try to negotiate a price down when other similar properties are available at more competitive prices or others offer more for the same price?  Many sellers open to negotiating their price will never get the chance.  I will be happy to discuss specifics with you.

Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are always opportunities out there.  As with the stock market, it is very difficult to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  Getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  Please do not wait for what you think is a better or the best time to start.  Buyers look all year long and can only see and buy properties that are available to see.  Based on what we experienced in 2020, is waiting for Spring something you would consider?  If so, now is the time to start planning.

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!

Delaware County PA December 2020 Residential Housing Update

Tri-County Suburban REALTORS and Showing Time, using Bright MLS statistics, have released their Local Market Insight report for single family homes in Delaware County Pennsylvania through December 2020.  If you would like more information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

The market continues to be affected by the pandemic and resulting economic impact.   However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision whether and when to sell or buy Real Estate is a personal one influenced by a number of lifestyle factors and external variables.  The pandemic typifies that.

The report compares current year-to-date results to one-year ago, same time period.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary greatly from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market any more than there is a national weather forecast so, whether you may be thinking about selling or buying, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market as well as the knowledge and insight to help you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are stale.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date MLS information.  Even then, while a sale may be reported as settled or closed today, the real question is when was the offer negotiated?  Typically, sales can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 8309 units listed for sale through December 2020 compared to 8993 listed through December 2019, a decrease of 7.6%.  Low inventory levels continue to affect related data points.  There were 7139 closed sales through December 2020 compared to 6984 through December 2019, a 2.2% increase.  The median selling price through December 2020 was $250,000 compared to $227,000 through December 2019, an increase of 10.1%.  The large decrease in inventory, meaning the number of properties being listed, had a relatively small effect on the number sold while substantially increasing their selling prices.  The number of currently available properties is well below one year ago and the Days on the Market (DOM) and “Sold to List Price” ratio are much improved.  Do we have an inventory problem or pent-up demand?  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract. During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen”, some without inspections to make their offers more attractive to sellers.  The effects of these strategies remain to be seen but Real Estate, perhaps with the exception of those properties acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing let alone removing the protection of an inspection contingency.  Even with our property disclosure law in PA, many sellers either do not know about underlying issues with their properties or forget to disclose them.  Whatever your feelings about property inspections, they can provide important information to a buyer.

What about the properties that did not sell?  Many came off the market and still remain off the market.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have issues holding them back.  Given the statistics, are people making an informed decision or reacting to what they “think” is happening in the market?  A brief conversation may be very helpful if you have any questions about selling or buying.

Anyone thinking about selling or buying needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  However, the effects of buying and selling remain for years.  They are important decisions and likely require the knowledge and insight that an experienced, trained and educated professional can provide.

I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they keep it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite the pandemic, every house will not sell.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their local market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a property was available to look at or purchase.  Some buyers may even make “full price” offers just to control the process only to have remorse later as inspection results are revealed.

If a market has a lot of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market:  why try to negotiate a price down when other similar properties are available at more competitive prices?  Many sellers open to negotiating their price will never get the chance.  I will be happy to discuss specifics with you.

Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are always opportunities out there.  As with the stock market, it is very difficult to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  Getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  Please do not wait for what you think is a better or the best time to start.  Buyers look all year long and can only see and buy properties that are available to see.  Based on what we experienced in 2020, is waiting for Spring something you would consider?

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!

How Buyers Bought Real Estate in 2020: Who is the Typical Buyer?

NAR or the National Association of REALTORS has released its 2020 Profile of Home Buyers and Sellers.  The profiles are based on a survey using 131 questions mailed to over 132,550 recent home buyers who also purchased a primary residence between July 2019 and June 2020.  The focus of this article will be buyers who sold one home to buy another.  This was a national survey so your market may be quite different.  Real Estate is local:  there is no national Real Estate market so please contact me for information about your local market.

NAR conducts their survey annually.  This year’s results were unique as it was impacted by the pandemic starting in March of 2020.

As I learned years ago, buying a home is an emotional decision justified with logic.  Your home is typically your largest asset and picking the “right one” involves many lifestyle factors.  The buying process can be interesting enough when there is only one buyer involved, however, there are often situations involving more than one buyer.  Family and friends may also be involved.  People have different ways of making decisions and we all handle challenges and stress differently.  Buying a home typically offers plenty of both.

• 31% were first-time buyers, compared to 33% in 2019.  The historic number has been 40%;
• The typical buyer was 47 years old (33 for first-time and 55 for repeat buyers), with those aged 25 to 34 accounting for 23% of all sales;
• The primary reason for buying was the desire to own their own home:  the numbers were 64% for first-time and 27% for repeat buyers;
• 85% purchased existing homes, 15% purchased new construction;
• 81% purchased detached, single family homes;
• Buyers moved a median distance of 15 miles while those who sold one primary residence to buy another moved a median distance of 20 miles;
• The median purchase price was $272,500, up from $257,000 in 2019 ($230,000 for first-time and $297,000 for repeat);
• Buyers typically paid 99% of the asking price; 15% paid more than asking;
• Buyers expected to live in their home for a median time of 15 years, 10 years for first-time and 15 for repeat, with 21% saying they would never move;
• 43% started their search online while 18% contacted a Real Estate agent;
• 91% found their agent to be a very useful or somewhat useful source of information;
• Buyers typically searched for 8 weeks and saw 9 houses, 5 of which were only viewed online;
• 97% of buyers used the Internet, the increase likely related to the pandemic;
• 64% were very satisfied with the home buying process;
• 88% used a Real Estate agent, 6% used a builder and 5% bought from the previous owner;
• 51% prioritized hiring an agent to help them find the right home;
• 87% financed their purchase with 95% of first-time and 83% of repeat typically financing 88% of the price.  First-time buyers financed 93% of the price and repeat buyers financed 84%;
• 11% said that saving for a down payment was the most difficult step.  47% of them cited student loans as a problem with 43% citing high rent/ mortgage payments and 36% citing credit card debt;
• 83% view a home purchase as a good investment;
• Buyers typically searched online for 3 weeks before contacting an agent, two weeks during the pandemic;
• 72% of first-time buyers were renters, 72% of repeat buyers owned their previous residence;
• As far as motivating factors influencing location:  62% prioritized the quality of the neighborhood, 45% convenience to their job, 43% the affordability of the house;
• As far as characteristics of the home and how they compromised:  23% prioritized price, 20% condition, 31% did not compromise;
• 53% of buyers said that finding the “right property” was the most difficult part of the process, 26% mentioned financing (including saving for a down payment (13%), getting a loan (8%) and the appraisal (5%)), 17% cited the paperwork and 15% mentioned understanding the process.  20% reported no difficult steps, which was common for repeat new home buyers;
• 56% walked through homes they found online, down from 65% in 2019, 37% drove by to look at the exterior and did not go inside.  Driving through a neighborhood to see if it meets your needs is an excellent way to narrow your focus while perhaps seeing areas you may not have been considering.  Many buyers eliminate houses after seeing the exterior;
• For internet “shoppers”, 89% found photos and 86% found detailed property information very useful;
• 64% were “very satisfied” while 30% were somewhat satisfied and 7% were dissatisfied;
• 59% signed an agency representation disclosure at some point with 27% signing at the first meeting, 23% signed when their purchase contract was written, 11% signed at some other time.  28% had no representation agreement;
• 51% of buyers wanted a Real Estate agent to help them find the right house, 24% wanted help negotiating (13% mentioned “terms” while 11% mentioned “price”), 8% wanted help with paperwork and 6% wanted help valuing comparables;
• The top benefits Real Estate agents provided were:  62% said helping buyers understand the process, 61% said pointing out features or faults with properties, 48% said negotiating better terms, 47% said providing a list of service providers, 37% said negotiated a better price and 30% said shortened the home search;
• Buyers ranked a number of agent qualities as “very important”:  98% want honesty and integrity; 93% want them to be knowledgeable about the process; 93% want them to be responsive; 88% want communication skills, 83% want them to be able to negotiate and 48% mentioned technology skills; 
• The median down payment was 12% for all buyers with 7% for “first-time” and 16% for “repeat”;
• 28% found the mortgage application process to be much more difficult than expected with only a 1% difference between first-time and repeat buyers. 

Buying Real Estate is unique compared to most typical purchases:  not only is it done much less frequently than other purchases, it typically involves multiple steps, each offering its own challenges.  If you would like to discuss selling or buying or if you have any questions about the process, please contact me.

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY!  We are not all the same!