Bright MLS March 2022 Delaware County PA Residential Housing Report

Showing Time, using Bright MLS statistics, has released their Local Market Insight report for single family homes in Delaware County Pennsylvania through March 2022. If you would like 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 overall market continues to be affected by lingering effects of the pandemic which contributed to (if not caused) an inventory shortage. Combined with historically low interest rates and increased post-pandemic interest in home ownership, the historically low inventory levels created a huge surge in pricing which many are confusing with the “bubble” we experienced some 15 years ago. This is different!

Interest rates have risen rather dramatically recently with some increase in inventory but, for the most part, prices and competition remain intense. As always, your experience may differ depending on your location and how you have been personally impacted. As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that as many sellers stay off the market while many buyers do extraordinary things to beat their competition.

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 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. Deciding whether it is the right time to sell or buy is a personal decision typically involving a number of variables. I can provide 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 presented and negotiated? Typically, financed 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 1868 new “for sale” listings through March 2022 compared to 1862 through March 2021, a slight decrease of .7%. There were 1577 closed sales through March 2022 compared to 1498 through March 2021, an increase of 5.3%. The median selling price through March 2022 was $269,000 compared to $245,000 through March 2021, an increase of 9.8%. The flat number of newly listed properties had no effect on the number sold while substantially increasing their selling prices. The number of currently available properties (391) is below one year ago (444). The Days on the Market (DOM) (29 vs 27) and “Sold to List Price” ratio (101.2% vs 99.5%) are improved while the MSI (Months of Supply) is less than 1 month (at .7 months), down 42% from one year ago. The low inventory combined with pent-up demand has created our current market. 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. What happens going forward?

Generally speaking, low inventory levels in some areas continue to produce 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 started making offers “sight unseen”, some without inspections to improve their odds. Buyers have tried to be very creative to give themselves an advantage. The effects of that remain to be seen, perhaps taking a number of years, 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. Technology, including photos, virtual tours, 3D tours and other things, however advanced, has its limitations. I think buyers need to walk through a house!

One major difference between the present day and past years in terms of competition and all that results from competition is the presence of investment groups buying large blocks of Real Estate, often with cash and limited contingencies, solely for the purpose of using them as rentals. Unfortunately, many of these purchases include properties that generally appeal to first-time buyers. The competition for them has driven up prices and prevented many new buyers from becoming homeowners. As long as rental income remains strong, these investors will continue to acquire properties. The irony is two-fold. First, rental income remains strong as many are unable to purchase their own homes which creates competition for rentals. Second, the elevated rental pricing is preventing many from saving for the down payment they need to obtain financing. I am not sure there is a way to change this in the short term.

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 very strong but some sellers are reluctant to allow showings or may have issues they are dealing with, especially if they need to buy their own “next home”. While selling their home may produce a ‘windfall”, what will buying cost? My only concern is whether people are making an informed decision or reacting to what they “think” is happening in the market. As with the market 15 year ago, the sellers who jumped in early may have had the best success if they needed to buy another home. Along the same line, some sellers will wait too long and miss an opportunity to maximize their proceeds.

Buyers and sellers need to do the same planning and preparation that those tasks typically require, regardless of the market. Easier said than done! Anyone looking to sell or buy needs to understand their local market and decide how to react to the pandemic as a “variable” that has evolved over the past two years 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 a 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 will not if they take 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 market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a house was available to look at or purchase. Some buyers may even make “full price” or higher offers just to control the process only to have remorse later as inspection results are revealed. Of course, this may well depend on the ratio of buyer and sellers so there is more to this than raw statistics.

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.

The overall economy, despite some people touting specific statistics, has serious issues that will keep some out of the market. 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 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. I am a phone call or email away and 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 2021, is waiting something you would consider?

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

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

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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 3 of 4: The Offer

Whether you are starting the process of buying your first or your “next” home, actively engaged in 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 cover this from four perspectives.  This is part 3 of 4.  This is a broad topic with no “one size fits all” answers.  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 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 with the owner but 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 have competition and 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 from 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 purchase decisions can be costly and their effects can last a long time.  Real Estate is typically our biggest asset and requires our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.

As I discussed in part two, The Search, once a buyer starts to identify possible houses to consider looking at and buying, there is a process to narrowing the list down to the best and getting in to see and evaluate them as quickly as possible.  I remind buyers that proper planning and preparation will position them to compete better and that they are not the only buyer seeing the search results they receive.  It all comes down to making an offer that will appeal to the seller or, at the very least, maximize the chance that the seller will offer a counter-proposal.  The purpose of negotiating is to keep talking.  While that can wear someone down, it is better than silence.  That being said, buying Real Estate can be very competitive so a buyer might want to assume that they have competition and may not get a second chance to negotiate after making an offer.  In some cases, you may want to make your “highest and best” offer from the beginning.  Unless you are concerned about over-paying, if your offer does not get accepted, you should have no regrets.  Inspections and a mortgage appraisal will provide some guidance about the property condition and the market value in any case.

When a buyer decides to make an offer on a house, only they know what they are thinking and hoping.  Did they make their best offer or are they expecting a counter-offer?  Whether they are suddenly inspired when they see a house or the decision comes after giving it some thought, if they have approached the process in a practical way, regardless of whether their offer gets accepted or not, they will at least know that they did their best.  That may be a small consolation but a buyer can only do so much.  Of course, if the search was haphazard or the buyer wasn’t completely convinced that a specific house was the best one for them but they decided to make an offer anyway, they may not know how to react even if they succeed.  Buyer remorse, meaning feeling that there may be a better option now or later or, even worse, if they come to believe that they made a bad decision after settlement, can be a problem.  There may be opportunities for either party to terminate a sale.  What will they to do?  Having remorse or doubts after closing is too late!

Some buyers will go “all-in”, perhaps to excess, with an offer.  This could include any or all of the following:  making an offer “sight unseen”, going above the asking price, keeping the contingencies to a minimum or waiving some or all of them.  Buyers have a lot of options when they really like a house, especially if they think or know there is competition.  What they do can be done to maximize their chances for success or it can be done to get a house under contract while they really take the time and effort to decide whether they picked the best house.  It is not for me to judge these things but there is a seller involved and one or two agents.  They can be impacted by a buyer’s motivation especially if the buyer is really unsure if they want to own the house.

How many buyers make offers “sight unseen” and cancel a sale using a contingency like a property inspection once they see inside?  The cost of inspections is minor compared to completing a bad purchase.  How many buyers make great offers and then ask for repairs or credits later to recover some of what they offered?  What about so-called “love letters” to the seller?  How many buyers just decide not to move forward and are willing to risk losing their deposit?  As I like to say, buying and selling Real Estate are business decisions justified with logic.  It is never over until the seller has the buyer’s money and the buyer has the seller’s keys.  So, what can prevent a buyer’s offer from being accepted?

1. Their offered price is not the highest.  For some sellers, the price is their primary motivation.  Oddly enough, in some cases sellers refuse the highest offers if they don’t think their house will appraise;
2. The buyer’s contingencies are not the best for the seller.  Perhaps the seller wants a “clean” sale, meaning few hurdles, or the buyer has a house to sell so they can buy their “next home”;
3. Something else within the contract is not the best for the seller.  This could include the settlement date, the amount of deposit money or anything that offers the buyer an option and the seller a choice.  Some agents and buyers use an “escalation clause” in the hopes of learning what it will take to make their offer better than the competition.  Many listing agents and sellers refuse to share details while expecting the offer to be improved.  Suppose there are multiple offers with these same clauses?  However you view them, they are not perfect and may not be enough to overcome stronger offers.  I view these clauses as showing that a buyer may have made a low offer and will raise it if they have to;
4. The offer does not include buyer financial information such as proof of funds for a cash offer.  Many PA agents use a “BFI” or “Buyer’s Financial Information” form, which I liken to a Seller’s Property Disclosure Statement.  Buyers and sellers basically want to know that the other person is serious and able to complete the sale.  The BFI provides an overview of the buyer’s financial information for a seller and their listing agent to review when comparing offers.  It complements a lender’s pre-qualification letter but, in my opinion, carries more weight as the buyer prepares it and the seller has legal remedies if the buyer misstates something whereas there may be no remedy for what a careless lender does.  Sad to say but I have seen some lenders provide letters that were meaningless.  I have heard of situations where a BFI negated a lender’s letter resulting in a declined offer.  Some buyers are reluctant to provide their financial information; some buyer agents and listing agents do not ask for it.  In a competitive situation this can be a problem.  Give a seller a good offer and convince them that it will settle and your chances should improve dramatically.  Most sellers want to minimize their own risk.

When a seller only receives one offer, they are more likely to negotiate if the offer is not exactly what they were looking for.  However, in a competitive or multi-offer situation, a buyer may not get a second chance to improve their “first impression”.  I remind buyers that, regardless of the type of market, there is no guarantee that they will get a second chance.  While many buyers are reluctant to make their “highest and best offer”, they need to understand the risk.  Wondering what happened later is uncomfortable.

For example, when I give a blank BFI to buyers, some will ask me how much they should reveal.  Obviously, they need to accurately disclose income and debt information and show at least enough assets to cover their closing costs.  However, some buyers are reluctant to show more than they need to justify their offer, typically saying that a seller may ask them for more money.  The same occurs with the pre-qualification letter.  Let me address both at the same time using a hypothetical scenario.

Suppose a buyer wants to offer $285,000 on a $300,000 house and they are financially able to go as high as $350,000.  Do they show enough to cover their offer?  The asking price?  Or do they show everything?  I say show EVERYTHING!  Again, if there is no competition, which you may not know, they will likely get a “second chance” if the seller wants more than $285,000.  However, if there is competition, a seller may just go with what “appears” to be a “stronger” offer or at least have a discussion with those agents who “appear” to be representing stronger buyers.  They may assume they have seen your best offer and move on.

So what if a seller wants you to raise your offer because they know you can?  Do you expect them to lower their price when you learn they have no mortgage?  Even if they ask, as I said earlier, the point of any negotiation is to keep talking to see if they can reach a mutually-beneficial agreement.  Most sellers will be happy to know that a buyer is not maxed out with their offer which could mean there is a greater chance of their loan being denied.  Even if they ask and you say no, you had a chance.  You may come to regret what happens but you had a chance.  It beats the alternative!

Ironically, when a buyer decides to raise their offer, it is likely that their expectations for the property inspection(s) also rises.  On the other hand, a seller who accepts less than they really wanted may be less enthusiastic when asked to make repairs or issue credits for repairs.  Either way, the goal is to keep the conversation going although one or both parties may tire if the process drags on and on and on.  While you continue talking, the house remains on the market allowing other buyers the opportunity to make an offer!

The bottom line is that a buyer needs to know what is in their best interest, understand the market they are in and make an informed series of decisions when making and perhaps negotiating an offer.  When an offer gets rejected or the parties cannot reach an agreement after going back and forth, a buyer needs to evaluate what happened to avoid repeating the same process over and over again.  I have worked with buyers who had several offers rejected.  For some, re-engaging in the process is tough.  Some give up for awhile while others jump right back in.  They may not know exactly what happened and they likely won’t find out what price the seller accepted for several weeks.  They may never know more than that.  A decision to buy or sell Real Estate is an emotional decision justified with logic.  Some are simply better prepared to put it all into perspective and continue moving forward.

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

HIRE WISELY:  We are not all the same!

The Type of Market and How it Affects Searching for Price

I recently wrote a blog on “Multiple Offers” and how two different agents viewed them.  I want to explore one of their comments further.  One agent said that multiple offers are the result of pricing a property too low.  While I don’t agree, I do feel that there is something to this.  Let me explain.

Suppose an agent is working with a buyer “pre-qualified” and comfortable spending up to $300,000 on a house.  Pick any price.  What “price range” should they search?  I say “range” because no one would search for one specific price.  You can start at a certain number or go up to a certain number.  This is why pricing is different than before we had the Internet.  Agents have to “factor in” what a consumer may be thinking rather than trying to interact with the mindset of an experienced, trained and educated agent.  Let’s start with the minimum first.

For some buyers, such as investors, I do not set a minimum.  They may be open to considering whatever is in their search results and open to driving by or studying what I send them to eliminate houses that do not appeal to them.  Buyers looking for their next home, especially if they are financing the sale, may need to pick a starting point to meet their needs and abilities as well as the requirements of their financing.  Some houses simply need too much work.  How far they look below their “top number” depends.  Sometimes the areas that interest them or the features they include will provide some guidance.  Otherwise, they may evolve into “knowing” that anything below $x is a waste of time.

What about the top end?  They are “pre-qualified” and comfortable spending “up to $300,000” so why wouldn’t that be the number?  This is where it gets tricky.  The market will suggest or dictate what you should do if you want to succeed.  In a buyer’s market, if houses are getting less than full price, you can search higher than their top number.  That does not guarantee success as there may be competition even in “slower” moving markets.  A seller may still want full asking price.

In a seller’s market, when houses are getting more than full price, you may want to search lower than $300,000, expecting to have to raise your offer, if given the chance.  In a hot market every house will not sell so this is not a blanket statement but you may not succeed by offering full price.

The MLS offers data comparing the selling price to the opening and final asking prices.  However, “data integrity” may be lacking if incorrect information is entered, possibly impacting the overall report.  An agent has to look “within the numbers” to see what is really happening with pricing.

A buyer needs to know their financials, including their comfort level, and an agent needs to interpret the market so that they can properly advise their client.  How much to offer is still the buyer’s decision.  In some markets, offering “full price” will get a house “under contract”.  In other markets, the “asking price” is where the bidding starts.  The price is either a ceiling or a floor.  Ultimately, prices have to appeal to buyers, agents and appraisers.   Even cash sales have some parameters.  Sellers set the asking price and buyers determine the value.

That being said, some sellers and their agents purposely underprice a house to expose it to more people in the hope of generating multiple offers.  As I often say,  Real Estate is not retail!

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

HIRE WISELY:  We are not all the same!

All Offers Must Be Received By … and Will Be Presented on ….

The type of Real Estate market produces some creative ways to “protect and promote” the interest of our clients.  The ebb and flow of who has “power” and “leverage” is interesting.  What may work (or frustrate others) in one market may appear insane in another.  That being said, we are required and expected to respect different “business models”.  However, do we have to do as we are told?

Many listing agents use a “Presentation of Offers” form which spells out what they want included in a purchase offer and how they conduct business.  I respect different “business models” and think the concept makes sense but I am left wondering about some of what they expect.  As long as the seller agrees that is fine but some of what I see seems counter-productive.  Here are a few examples:

• An agent must submit an offer before being allowed to show a property;
• A buyer must perform inspections before submitting an offer;
• Do not have any contingency expire on a weekend or holiday.  If you do, add language to the agreement stating that the time frame is extended to the next “business day”. What exactly is a “holiday” anyway?;
• Offers received after 5pm will be presented to the seller the next morning;
• Offers received after 5pm on Friday will be presented to the seller on Monday;
• Offers are to be submitted at a “specified time” and will be reviewed at a “specified time”.

Respectfully, if a seller agrees with any of these or other terms, perhaps that is their wish and their choice, that is fine but some of these make me wonder.  Real Estate is not a 9-5 job although it should not be 24/7 either.  I guess it all comes down to the type of market.  The question is:  do we have to comply?

We are in the hottest seller’s market I have seen in years.  Every house seems flooded with showings and multiple offers which, combined with the pandemic, many sellers and buyers are finding very frustrating.  To accelerate what I refer to as the “second step” to selling or buying Real Estate, the “third step” being when an offer is negotiated, some listing agents are doing one of two things to generate immediate interest.  They start showings at an “open house” or use a “Coming Soon” strategy to make buyers salivate before they can legally get in.  Both can work but may be creating a frenzy that will not play out as expected.  Some buyers are making offers “sight unseen”, waiving inspections and/ or going well over asking price, all in an effort to beat real or perceived “competition”.  Some agents just make their listings “active” and let the fun begin.  Th market will change.  It always does.

Some agents take this a step further and advertise when offers are due and when they will be presented to the seller.  These are bold steps that must be managed.  I find it interesting when a property listing expires unsold or a contract gets canceled and the listing agent neglected to remove language stating that offers were due and would be presented weeks or months ago.  OOPS!

Let’s suppose I activate a listing on Friday, state that offers are due by Monday at 3pm and will be presented to the seller at 7pm.  Pick any days of the week or time frames you prefer.  What happens next?  Compliant buyers and their agents will honor the listing agent’s instructions assuming they will be followed.  But will they?  Suppose they aren’t?  Some agents will try to submit offers after 3pm.  Does the listing agent say NO?  Is that buyer or agent penalized for being late?  Suppose the buyer agent has difficulty reaching the listing agent to say they have an offer or has trouble getting it to them?  We do so much electronically these days so that should not be a problem but it can be if there are Internet or equipment issues.

Suppose I have a buyer who does not like competition, may have lost out on one or more other houses they really wanted to own or they just want a quick answer so they can pursue other options before they sell?  What should I do?  I would submit an offer as soon as I can and, if my buyer is willing, we can make it expire prior to the 7pm deadline.  Listing agents are required to submit all offers in a timely manner.  While it is possible that their seller has said not to present anything before Monday at 7pm, if I were the listing agent I would let my sellers know that I had something, especially if it is compelling.  Suppose the seller says they want to accept the offer that came in early?

Buyers and their agents who were in the process of meeting the 3pm deadline have every right to be upset but did the listing agent do anything wrong?  Suppose a seller signs an offer before an “open house”?  At the very least, if my seller decided to sign an offer earlier than we advertised, I would let agents know what happened to be transparent and fair.  I would not want to waste their time and effort.  You never know, something could happen with the accepted offer and we may need to resume showings.  Perhaps a buyer is willing to provide a back-up offer.

Multiple offers are common these days which sounds nice but explaining them, evaluating their differences, responding to them and selecting the “winner” can be more complicated than it seems.  Are they taken at “face value”, which means that no one is provided an opportunity for a “second chance”, or are all or some “negotiated”?  What happens if they only “entertain” a few of them?  Even with multiple offers there is no guarantee that a seller will get what they want but they might learn the market’s perception of value.  Sellers determine the price but buyers determine the value.

What happens when the “sight unseen” buyer finally sees inside or the buyer who waived inspections questions the condition of the property or what the seller disclosed?  What happens when the appraiser files their report?  The “creativity” that secured a signed purchase agreement does not guarantee a deed transfer.  Real Estate is like 3-dimensional chess compared to a basic retail transaction where I pay you and I get my purchased item right away.  Real Estate provides “delayed gratification”:  every day until settlement may offer an unpleasant surprise.  It is never over until the seller has the buyer’s money and the buyer has the seller’s keys.

Even in “normal” markets, which generally means 3-6 months of available inventory, depending on what you believe, things can get contentious.  While we generally “cooperate” with each other, this is a competitive industry.  Only one buyer gets the house.  Buying or selling Real Estate are emotional decisions justified with logic.  Putting in the time and effort to buy or sell Real Estate requires commitment and exposing yourself to potential frustration.  They are not things most people do every day.  What one person thinks is creative can have quite a different reaction from someone else.

REALTORS have to manage expectations.  We need to explain the process of buying or selling to our clients.  We have done this before.  The consumer has 24/7 access to endless amounts of data and information, including television shows, but it takes an experienced, trained and educated professional to add two secret ingredients:  knowledge and insight.

When it comes to buying or selling what is likely your largest asset and biggest investment,

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

HIRE WISELY:  We are not all the same!

Multiple Offers: Two Different Opinions

Competition and multiple offers seem normal these days.  Your opinion about them probably depends on whom you represent and your personal experiences.  They do not guarantee success for a seller but make it harder for buyers and their agents.  I recently heard two very different opinions about them.

A buyer’s agent, frustrated by losing yet another bidding war, told me that multiple offers are the result of pricing a property too low.  I guess that makes some sense, pricing it higher might reduce the amount of competition but is that best for a seller?  Would that result in their seeing the highest and best possible offer?  Who knows?  There are a few things I think I can say in general:

• Competition tends to produce the “highest and best” offer, even if it is not what a seller wants.  When there is only one offer a seller may think a better one will come later.  They often do not.
• Looking at and comparing multiple offers can get tedious, especially if they seem repetitive.  I have had several listing agents tell me that, at some point, their seller stopped reviewing additional offers.  Presumably, they had at least one they liked but that concerns me.  A buyer agent who shows a house and takes the time and effort to prepare an offer should be able to trust that their buyer’s offer was considered.  We have forms to confirm that but the bigger picture is that offers not presented may be better than what a seller accepts and that those that “appear” uncompetitive may just be a starting point for a buyer who really likes a house.
• Some agents actively encourage a flood of showings hoping for multiple offers and a quick sale.  There is nothing wrong with that but it creates an environment that must be managed.  What is the goal?  I assume it is to shorten the marketing time and to get the “highest and best” offer that will appraise and close.  The real dilemma may be knowing whether to accept an offer or question whether it will appraise.  What if it doesn’t?  Having a pre-listing appraisal may help but may not be ideal, especially if the market is rising.
• While there is nothing wrong with multiple offers, I think it places some responsibility on everyone involved.  Our clients must be advised of the advantages and disadvantages.

This agent was frustrated with writing offers that failed and having to start showings again.  Imagine being a buyer who loses your preferred new or “next” home to competition, especially if it happens again and again.  We are in perhaps the best sellers’ market I have ever seen and its major attribute, if you  want to call it that, is that the number of buyers far exceeds the number of available properties.  While this does not mean that every property will sell, every buyer will not get a house.

Another agent posted on social media that a buyer’s agent who writes offer after offer is not doing their job.  I would love to have these two agents in the same room.  While I do agree that some agents do not adequately prepare their clients, both buyers and sellers, for what is likely to happen in this market, every buyer will not be able to buy a house.  There is a supply problem.  Buyers can adjust their needs and wants and pursue a house that is not selling but will they?  If multiple buyers want the same house, only one buyer will get to own it.  Does that mean that every agent who represented an unsuccessful buyer failed to do their job?  NO, but it could.  In a multiple offer situation, a buyer  may want or need to make their “highest and best” offer rather than assuming they will get a second chance.  A buyer agent has to present what they are given but the buyer decides their terms.  Doing the same thing over again is not a formula for success but let’s not assume that the buyer’s agent did anything wrong.

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 2 of 4: The Search

Whether you are starting the process of buying a home, 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 part 2 of 4, The Search.  This is a broad topic with no “one size fits all” answers.  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.

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.  How a buyer and their agent conduct “the search” will help determine the outcome.  Is the buyer convinced that they are aware of every house that is a potential match?

As I discussed in part one, Planning and Preparation, I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  Once you have hired an agent, spoken to a lender to determine your financial comfort level and thought about your “needs” and “wants”, you are ready to move forward.  There is no guarantee of success but working on those three items can be a real asset later.  All you can do is put yourself in the best position to compete.  The search then becomes the focus.

If you have not already set up a search, now is the time.  If you already have one set up, I suggest you re-evaluate it.  Your search criteria may change so I suggest that you keep your agent informed so that they know what you are looking for.  You may even have more than one search set up.  My point is that you and your agent should be searching for the same properties for you to consider.  Otherwise, you may miss an opportunity.

For many buyers, the initial search results can be overwhelming:  do not get frustrated or complacent with the number of possibilities or how to evaluate them.  You will likely find that many are not real matches so do not think that a high number of search results guarantees accuracy or ensures success.  Some of the houses on the list may already be under contract or close to it:  you are not the only one seeing the information.  On the other hand, there are probably houses you might like that do not appear in your search results.   I will cover this further in part 4 but will tell you that any search results are only as good as the information a listing agent uploads and the criteria a buyer or their agent uses.  This is why searching on your own can be deceiving.

If there are only a few houses in your search results, you can wait to see if any house sales fall through and what houses come on the market.  Or, you can revisit your comfort level or your wants and needs to try to expand your options.  Your time frame and patience will determine what you do.  If there are many houses, you may want to consider adding to your search criteria or prioritizing the list before starting any showings.  Again, do not take comfort in thinking you have many options.  In either case, do not feel pressured into pursuing the best of a number of bad choices.  Buying a house is a major life decision.

Buyers need to stay on top of new and updated property listings.  Again, you are not the only one getting this information.  Where and how frequently you get information are things to consider.  You need to decide which houses to visit unless you are willing to make an offer “sight unseen”.  Showings add a potential new task to the list and it frustrates some buyers.  Let me explain what I mean.

I have shown buyers just one house while I have shown a few buyers as many as 20 or so houses during one tour.  I have found that showing a buyer about 5 houses makes a good tour if there are that many to see.  This allows buyers to take their time and remember what they saw.  A tour should not be a race to get done.  After the initial search results, unless a buyer makes a major change to their criteria, you may only see a house or two on any given tour and that is fine.  Waiting until you have more to see only allows other buyers to get there first.

If there are 5 or fewer houses in your search results, we should try to see them all.  Of course some may already be under contract or our schedule may conflict with an owner’s which can create an issue if you really like one we see but you want to wait to see one or more we couldn’t get in to see.  What do you do?  If you wait, the one you like may be sold to another buyer and you may find that any you waited to see were not right for you.

Suppose there are 10 houses in your search results.  We could try to see them all but let’s assume that we need to go out twice.  If a buyer has prioritized their list from “best to worst”, they may have eliminated some and we can start looking at the best.  Then, if they see something they like during our first tour, they may be able to commit to making an offer knowing that the remaining houses did not measure up to what we saw.  In slower markets you may be able to see a house a second time.  You may want to compare two or more or have someone whose opinion you value take a look.  In hot markets, especially with low inventory, there is little time to waste.

How buyers prioritize their list is subjective but technology has made it easier.  The MLS and Internet allow more pictures and longer descriptions than in the past.  That being said, some agents use far too many pictures while others upload no pictures at all or only a few.  Some delay uploading pictures:  do you wait to see them?  Many listings have pictures of low quality but at least a buyer gets to see more than they could years ago.  The MLS and Internet can really help with eliminating houses instead of wasting your time and effort.  Every day you spend looking at houses that you don’t like could let another buyer get one you would have liked.  Buying Real Estate can be very competitive.  It can be like shopping on Christmas Eve for that new toy.

If there is time, especially if we will need to go out several times to see all of the options, I encourage buyers to drive by houses first so they can prioritize where to start showings.  This is especially true if the pictures or description are lacking.  The initial search results tend to offer the most possibilities which means more drive time than may be needed later.  Future results will likely be fewer in number making this easier.  Some buyers just want to get inside and question why they should take the time to drive by.  When you buy a house, you are buying the neighborhood and a lifestyle.  I have had many sellers tell me they wish they had spent more time looking to see if a better option were available.  Some just wished they had bought a different house.  Their houses tended to be harder to sell and provided lower equity than others they might have bought.

Driving through neighborhoods on your way to see houses on your list will help you learn more about different areas and your potential neighbors, especially if you are looking in unfamiliar areas.  In addition to gathering information, you may even see a “For Sale” sign on a house not yet listed.  I have had buyers add or eliminate areas to their searches based solely only on their driving through neighborhoods.  The better informed and more comfortable a buyer is, that goes back to planning and preparation, the better off they will be when they commit to making an offer.  Hesitation and indecision are not good, especially when there is competition.  Driving by houses is a great way to prioritize the list.  Some buyers may need to consider compromising between the best area and the nicest house.  You can change or update a house but the neighborhood is what it is.

Ideally, when a buyer finds a house they really like, if they have done the planning and preparation and are satisfied with how we have searched for options for them to consider, they will feel more comfortable making an offer.  They may learn something later that affects their decision which is why we have contingencies like property inspections.  Looking online is not the same as walking through a house and, unless you are a contractor, you won’t have a complete understanding of a house after a showing.  Again, this is not retail.  The process has several steps, allowing buyers and sellers opportunities to change their mind.  If there is doubt when making an offer, it can get magnified later.

As I mentioned earlier, house sales fall through putting some houses back on the market and new listings will appear.   Perhaps a price reduction makes a house an option that was not there before.  A buyer can wait, hoping or expecting something better to come along.  Maybe it does; maybe it doesn’t.  If a sale falls through, what happened?  Is there an inspection report available or was there a financing issue?  In general, how is the market evolving during your search?  Are prices rising, stable or falling?  What is the trend in the interest rate?  Any of these can add pressure, especially if you are not completely comfortable with what we are doing.  There is a lot that goes into buying Real Estate!

The simple fact is that there are many variables when it comes to identifying houses to consider buying and how to react to the information you have.  Some are controllable; some are not.  The challenge may seem endless and the “fun” aspect can evaporate.  All any buyer can do is put themselves in the best possible situation to identify and react to any choices they have.  They may or may not have a lot of time to see a house or decide whether to make an offer.  They should not assume they will have a second chance to reconsider how interested they are.

Any buyer can readily get a lot of the data and information from numerous sources but most need a professional to provide the knowledge and insight required to navigate the entire process.  When is it time to stop and make a decision?  Once you think you have identified the BEST house for you, how do you get to own it while protecting yourself if something goes wrong?  In part 3 I will discuss The Offer.

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

HIRE WISELY:  We are not all the same!

Delaware County PA March 2021 Residential Housing Market Update

Tri-County Suburban REALTORS and Showing Time have released their March 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, http://AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

Many areas continue to be affected by the pandemic 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 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 causing a frenzied sellers’ market while 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.  It only covers three months and crosses over from pre-pandemic to pandemic time frames so it is not “apples-to-apples”.  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 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.  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 811 new listings in March 2021 compared to 667 in March 2020, an increase of 21.6%.  YTD 2021 shows 1882 new listings compared to 1941 in 2020, a decrease of 3.0%.  The 5-year March average is 859.  There were 444 active listings in March 2021 compared to 848 in March 2020 with a 5-year average of 1337.  Low inventory levels continue to affect the market:  the “Months of Supply: is down 62% as compared to last year.  There were 518 closed sales in March 2021 compared to 486 in March 2020, an increase of 6.6% with a 5-year average of 498.  The median selling price was $256,000 in March 2021 compared to $229,900 in March 2020, an increase of 11.4% with a 5-year average of $214,370.

What effect did the large decrease in new listings have on the market statistics?  It 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) which dropped from 43 to 27 and the “Sold to List Price” ratio which rose from 96.8% to 99.5%.  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.

Do we really have an inventory problem or pent-up demand?  I think we have both and it remains to be seen what happens in the long run.  I expect more sellers will take advantage of the market, even if buying is not an option and they decide to rent to take advantage of current selling prices.   How many buyers can this market continue to generate?  For better or worse, at some point the market will normalize which means two things.  First, many sellers may regret not taking advantage of the market.  Second, activity will slow as we exhaust the number of buyers, many of whom decided to buy early.  That is what has happened in the past.

On the other hand, 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 after the buyer gets to learn more.  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 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?  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.

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 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.  Buyers look all year long and can only see and buy properties that are available to see.  If you need to buy in order to sell, let’s have that conversation.  Now may be the best time to start planning.

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

HIRE WISELY:  We are not all the same!

When Should You Reduce Your Asking Price?

That depends.  Depends on what?  There are several things to consider.  Let me discuss two.

First, pricing is an art and not a science.  No matter what data and information went into determining your asking price, the price is an educated guess at best.  Is it realistic or hopeful?  If there is little or no information to rely on, it might just be a shot in the dark.  Either way, what would convince you to consider lowering it?  Some sellers think a reduction is the same as a loss when it might well be the difference between selling or not.

I suggest that a seller give this some thought at the beginning of the market process.  Their thinking may change but waiting to consider how to react to the market when a house is on the market can be stressful and cause a seller to miss a great opportunity.  Some sellers measure success by showings.  However, a lack of showings may the result of poor or ineffective marketing.  What about a house that gets many showings but no offers?  That is likely a price problem as it suggests that buyers found more for the same price or the same for a lower price.

Second, a listing agent needs to have a discussion about pricing.  The points already mentioned would make a great conversation.  In addition, a market analysis will provide historic information as well as some insight into what is happening now, both of which have a degree of subjectivity and built-in error.  As part of looking at the market and evaluating what the owner is selling, a listing agent needs to know their seller-client’s motivation:  is it time or money?  If the seller is committed to selling sooner rather than later, a price reduction would be more likely to be considered.  Of course, in that instance an asking price might have been aggressive at the start.  If it works, great.  If not, some sellers will think they have already agreed to accept less than the market value.  If they prioritize the amount they receive, they may be reluctant to reduce at all and if they agree, it could take time.  Again, having this discussion early on will save time later and may prevent problems.

Historic sales are just that.  Depending on the time frame you use, they may cross months, seasons and even years.  Even if a property settled yesterday, when was the offer made and negotiated?  It could be weeks or months old and not indicative of the current market.  A look at the pricing for houses under contract, while not providing the number the seller accepted and not being subject to an appraisal, will at least tell you what one buyer found compelling enough to consider.  You may see a trend higher than or lower than the settled pricing.  Of course, any agreed-upon price could be quite different from the then-current asking price and you won’t know that until after settlement.

Depending on the market, I believe that when a new listing hits the active market, it has its greatest chance of attracting interest as there may be more prospects looking at that time than will enter the market in the next few weeks.  It has been my experience that new listings can and should get a flurry of activity quickly and then, if activity or interest has been lacking, the seller has a decision to make.  Generally speaking, activity drops as the supply of buyers reforms, meaning new buyers come on the market, sales fall through or buyers have shopped and are ready to make an offer.

Many think you should give a house a week or two to gain maximum exposure to attract most of the buyers.  That makes sense.  After all, if you are satisfied with the marketing, meaning that agents and buyers will be able to find your property in their search results, a lack of activity generally means that buyers are not interested or they are simply more interested in other properties.  Again, activity is a poor measure if an owner wants a sale.  Showing your house to an endless parade of lookers gets old fast.

If buyers can find houses similar to yours for a lower price, you either need to meet the competition or wait until the competition has been sold.  If they can find houses priced like yours that offer them more, assuming you will not make improvements, you need to re-price to offset what you do not have.  Some sellers will consider making upgrades but that is risky and most will cost you more than they are worth.

The bottom line is that pricing is a tool.  It is used to connect buyers to properties.  However, Real Estate is NOT retail:  the price is generally considered negotiable.  The market helps determine whether the asking price is a “floor” or a “ceiling”.  Ideally, a price should take into account your location, the features and the condition while being competitive with other properties.  Owners determine their asking price and buyers determine the value.  If you believe that the price is the reason people aren’t coming or aren’t making offers, you can re-position your house with similar competition.

The real question is how much do you reduce?  If you are getting showings but not getting any offers or only low offers, the situation may not be as dire and perhaps your agent can contact the buyer agents who have visited to see if there is a price that would work.  A good buyer agent will initiate contact if their buyer-client has interest but not at your asking price.  A good listing agent won’t wait to see if you get any feedback. 

I believe that your first price reduction should be substantial and that you need to review the competition, stay engaged as the market changes and select a price that makes sense from a competitive standpoint and a technology standpoint.  Some houses need more than one reduction either because a house is simply priced too high even after being reduced or because the market changes.  When you pick your price, you pick YOUR competition.  There is no magic to it:  a reduction either changes “your luck” or it doesn’t and needs to be looked at again.

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

HIRE WISELY:  We are not all the same!