Insider’s View

How Buyers Have Evolved

When you hear someone say ‘evolution,’ typically the first words that come to mind are ‘growth’ and ‘improvement.’ Everything in the natural world evolves, as do more abstract or artificial things. Essentially, we are surrounded by evolution.

In real estate, we most often see these stages of growth within our buyers as they go through the journey of purchasing a home.

How Do Buyers Evolve?

To begin, let’s talk about the market that exists today. We know that markets fluctuate year-to-year, and it is fair to say that the home buying experience from 2003-2012 has essentially zero resemblance to what we are seeing today. So the sooner you can let go of what you remember about buying a home a decade ago, the better off you will be on your home-buying journey today. Even a home buying experience from just two years ago can vary drastically from that of today. The current market has inventory conditions tighter than any period in modern history and the Dodd-Frank Act has permanently altered the mortgage markets in ways we are still discovering.

Stage 1: All of the Good Cheap Houses Sold in 2009 and 2010

When the market flipped, production continued well after the demand for housing stopped. This lag between when everyone realized what was happening and when construction actually stopped meant that home production continued at a staggering pace for up to 9 months. Stated simply, 2 million new homes were built in the US in 2007 while less than 500,000 were built in 2009.

It goes without saying, the continued production led to an unimaginable overhang that the market was forced to absorb before hitting the ‘reset’ button. This surplus of recently-built homes provided a plethora of steeply discounted housing all the way into 2011.

Eventually prices began to stabilize, and those looking to buy were disappointed to learn that the 20% discount on these quality homes was no longer available.

Stage 2: Every House I am Interested in Sells Before I Can Get to It

By 2010, market values were as far below trend as they had been above trend in 2007. And by 2015, the same conditions that had driven up the market to its heights (more demand than supply) were beginning to materialize again, although for another reason. The spring markets of the last several years brought bidding wars, multiple contracts and escalation clauses (all hallmarks of 2006-07) in many sub-markets of Richmond. The conditions are unlikely to change as building has still not caught up with demand and ‘quality’ don’t sit around long, especially in mature neighborhoods. In fact, the 2018 market has seen historical inventory lows.

Expecting to be able to take your time and sit on your decision for several days will result in lost opportunity.

Stage 3: Every Contract Price Seems to Be Higher than I Expect!

Comparable sales are what make the world go ‘round — sort of. Appraisals, assessments and Trulia/Zillow estimates are all calculated using comparable sales. Comparable sales occurred in the past and represent where the market was and not where it is. If you choose to exclusively use past sales to drive current decisions, your valuations will feel low compared to the actual market values. Although it may sound unsettling, the same can be said of the market’s free fall in 2009 (albeit the exact opposite) meaning everyone thought they were making killer below-market deals, only to realize the market was plummeting faster than they thought.

Past events are a great tool to measure progress… use them for that purpose.

Stage 4: Every Seller (and/or listing agent) is Becoming Unrealistic Again

Denial of reasonable repair requests, refusal to renegotiate when appraisals miss, ‘shopping’ contracts, missed deadlines for response, pocket listings … they are all starting to occur again. When response times are not valued, contract agreements disregarded or other behaviors designed to extract value after the fact, buyers become frustrated and decision making becomes poor. Just remember, when the market rolled over, 2009-2010 buyer behaviors were identical. If one side of the market has a huge advantage, they will act accordingly.

When you are buying into a tight market, expect these behaviors. Being surprised or frustrated by questionable seller behaviors is a recipe to miss the bigger picture.

Stage 5: Trulia and Zillow are Total Crapshoots and Cannot be Trusted, Despite Some Really Great Commercials

In their best markets, Zillow can only estimate the FMV of a $300,000 home within $30k about half the time…

Back in 2009, Trulia and Zillow were just websites with funny names… Not anymore.

Unfortunately, Trulia/Zillow have now become the gold standard for many people and thus have a (negative) impact on buyer and seller decisions. It has been one of the most detrimental additions to our industry in the recent decades. Essentially, Trulia and Zillow use inaccurate data and therefore give inaccurate valuations… And the inventory they depict as ‘available’ is pretty questionable, as well.

Many have this technology-driven fantasy that some computer in Silicon Valley has more market knowledge than the locals who actually live in the Bay region — and it’s not their fault. Trulia and Zillow are both incredible technological feats that offer some really useful tools; however, it is the feature that gets the most recognition and application that unfortunately needs the most work.

Stage 6: Appraisers and Underwriting Departments are Petrified of Mistakes Thanks to Dodd-Frank

The Dodd-Frank Consumer Protection Act is another classic example where government intervention hurt the market it was designed to protect. Regulation was increased, compensation to lenders was capped, product choices were decreased, and additional bureaucracy was created. To top if off, Dodd Frank was enacted well after the financial crisis had occurred and largely repaired itself.

In the short run, the act has created an atmosphere where decision makers are waiting for legal precedent to guide their actions (think ‘lawsuits’.) Even several years after passing the law, only half of the over 400 new rules created under the act have been finalized. The level of uncertainty created by Dodd-Frank is staggering. Currently, those in the mortgage business have little guidance and therefore, decision making is stiflingly slow and conservative. Any loan which does not fit nicely into the proscribed box (think ‘most every loan’) represents an unnecessary challenge.

Evolutionary Summary

When it comes down to it, the evolution of a buyer is mostly consumed by understanding market conditions. The past decade has brought unparalleled shifts in market fundamentals in the Chesapeake Bay region, and failing to understand the differences in the process, as well as the impact of those differences, can lead to mistakes.

At Bay Properties, we want our clients to succeed which is why we make it a priority to help buyers understand and navigate market conditions.

Oyster Gardening 101

Mary, Mary, quite contrary,
How does your [oyster] garden grow?

Why Oysters?

Oysters are the Chesapeake Bay’s natural filter. Along with trapping food and nutrients in their gills, they also catch suspended sediments and chemicals that are in the water. Just one acre of oysters can filter over 140 million gallons of water per hour and remove 3,000 lbs of nitrogen from the bay every year — WOW.

Unfortunately, oyster populations have seen a drastic decline from their historic numbers due to over-harvesting, disease, and habitat loss. During the late 19th century there were enough oysters to filter the entire Bay in just three or four days; however, today it takes almost a year to filter.

In recent years, special measures have been taken to begin restoring the region’s oyster population. Harvesting is now managed by commissions in Virginia and Maryland to ensure sustainability, numerous oyster sanctuaries have been established, and the public is becoming more engaged.

Everyone must do their part in order to restore oysters to the Chesapeake Bay, and one of the best ways for individuals to get involved is by growing oysters from home.

How Do I Start?

If you have access to a pier or dock, you already meet the first criteria for becoming an oyster gardener!

The Chesapeake Bay Foundation’s Oyster Gardening Program is a wonderful resource to guide you through your journey. It is required that all new oyster gardeners attend a short seminar that will teach them how to maintain their oyster garden for the coming year. At the end of the seminar, you will have the option to take home thousands of tiny baby oysters, as well as cages to grow them in.

After a year of growing and caring for your bunch, you will return the mature, adult oysters to CBF during an Oyster Round Up in May/June. The returned oysters are then taken to nearby oyster sanctuaries to help rebuild reefs, and you can start all over again!

For more information, check out CBF’s Oyster Gardening FAQ Page.

Tidewater Oyster Gardeners Association – http://www.oystergardener.org/

Don’t Shoot Yourself in the Foot

Every agent has seen it before: a client walks through the front door into a home and is all of a sudden completely disengaged. You can see it on their face and in their body language — your client is NOT buying this home. This can be even more frustrating when you know the home fulfills all of their needs and deserves heavy consideration.

Your client saw something in the home that they decided was a deal breaker.

Here are some of the most common errors that sellers often find to be ‘deal breakers’:

Strange Smells
You don’t have to bake cookies before every showing, but give as much consideration to the smells of your home as you do the visuals.

Odors like ashtrays, litterbox, damp basement, and dirty hamster cage are some of the usual suspects. But the nameless ‘what-is-THAT??’ smell that hits you the moment you walk through the door can easily kill a deal.
People have a hard time getting over any pungent odors and will decide for themselves that the smell will never go away. And once they have made this conclusion, it is almost impossible to convince them otherwise.

If you are unsure whether or not you have a smell, call a relative or a friend to come over and investigate. At some point we all get used to the smells in our own home, so let someone else’s nose be the judge. If they detect something, figure out where it’s coming from and fix it.

Lastly, don’t cook any pungent foods the 24-hours before your showing. We know you’ve been dying to try that chicken curry recipe, but DON’T do it.

Your Pets
Buyers don’t want your pets to be there when they are looking at your home.

We know Sparky is harmless and just wants to kiss us to death, but it is vital that you get him off the property. Putting him in his crate, or the laundry room, or even the backyard will not suffice. He needs to be gone.

Pets are a huge distraction when trying to show someone a home, and they can also be a liability. Call up a friend and see if they can pet-sit for a few hours, or let Sparky have a spa day at the groomers. No one wants to be jumped on, barked at or stalked by your pet.

The Dirty ‘____’
Some of the most telling signs of how well a home has been maintained over the years are actually in the little things.

Stained carpet, dusty vents, cobwebs, smudgy windows, a messy basement, disorganized closets, a leaky shed… These are all giveaways that the effort put forth towards the upkeep of the home has been less than stellar.

Once you have cleaned your home until it shines and smells like fresh linens, hire a cleaning crew. They will work their magic on places you didn’t even know were dirty, and you will be truly grateful for it. This is one of the best investments anyone selling a home can make.

Wallpaper
Wallpaper can be a maddeningly difficult feature to change in a home yourself — especially if it covers the majority of the walls. The entire removal process is time-consuming, and it can end up doing more harm than good to any underlying sheet rock.

Personally, if I see a home splashed with 1980’s wallpaper, I immediately scroll past it. And although not everyone has the same sentiment, most people will avoid a home with more than one room of wallpaper.

Seller Present
If people are coming to look at your house, do yourself a favor and leave before they get there. Your presence, even your perceived presence, will make the buyer feel uncomfortable and will therefore cost you money.

People aren’t buying a house, they are buying a home. And when someone is looking for a home, they are also looking for a feeling. If you are present, then the home is still yours and the buyer is unable to feel as if it could ever be theirs.

Personal Items
Be prepared to de-personalize your home. This goes along with that feeling a buyer is looking for. It shouldn’t be sterile and cold, but make sure it’s not so ‘you’ that it can never be ‘them.’

Too many photos, suggestive art, political propaganda, shrines to pets or anything that draws attention away from the home should be minimized, if not removed. You never know who is coming to view your home, and you certainly have no idea what their political affiliations, religious beliefs, lifestyle choices, etc. are going to be. And keep in mind, they might bring their children along with them.

Although art is a great way to stimulate the mind and start conversation, this is not what you want to happen while your home is being shown. I have seen more controversial art pieces during my time as a realtor than you can imagine — some of which have been borderline pornographic. And that political sign great if you are a proud member of the ‘_______ Party,’ but imagine the buyer looking at your house is a member of the opposite party and is now angrily talking about the upcoming election and no longer paying any attention to your home.

The more difficult you make it for people to feel comfortable in your home, the more trouble you will have finding a buyer that is able to envision it as their own.

Hard to Show
If you plan on putting your home on the market, you must be prepared to show it on short notice. You will not always get enough notice as you would like, but try not to get frustrated. Everyone is has their own busy schedule, and sometimes things come up at the last minute.

If your agent gets a request to show your home, respond to them promptly. Your house is most likely going to be part of a 3-to-4-home tour schedule that is sequenced by locality during a specific time frame, and trying to change that time frame means the buyer’s agent will probably just opt you out altogether.

We understand that emergencies happen and guests come to visit, but even then, try your best to accommodate. Having a home on the market is inconvenient and a nuisance, but having to keep your home in show-ready condition for months is far more painful than allowing easy access and selling it quickly.

If you want to sell your home as quickly and pain-free as possible, make it easy to show.

Summary

Selling a home is disruptive and tiresome, so don’t drag out the process.

If you are going through the effort of putting your home on the market, then don’t make unnecessary mistakes that will prolong the marketing time and in turn drive down the price. Talk to your agent and listen to their advice objectively. The suggestions they make are only going to help you.