According to a recent analysis by Money Magazine, the coming year can be a good one for both buyers and sellers (“Make More in 2014,” December, 2013). What should you be doing to prepare yourself and your clients and to assure that 2014 is, indeed, a very good year for everyone?
Here are the trends we’re seeing, and how both buyers and sellers can be winners. Of course, these predictions are very general. Local markets vary dramatically, so you’ll want to combine our thoughts with specifics about your own universe. However, these ideas should give you a head start for your 2014 marketing strategy.
For the buyer. Distressed properties, short sales, and foreclosures are beginning to decline. This means that buyers will have less competition from investors and speculators. A more stable market will cut down on some of the bidding wars that may have intimated buyers– especially first time buyers–in recent months. The fact that inventory is down could be a negative, however. If you have buyers who are holding out for the perfect place—the dream home—waiting too long means they will come up against rising interest rates, which will cut into their buying power.
Low-ball offers won’t produce many winners in this market. Even though speculation is on the decline, sellers are still getting multiple offers and they have no reason to make a counter offer if there are other, and possibly better, bids on the table.
Lenders are loosening up a bit, so buyers should have a somewhat easier time qualifying. However, you should advise your buyers to move quickly once an offer is made and accepted, since interest rates are changing daily—if not hourly. Lock in the rates and look for quicker closings. Don’t take your business to lenders who drag their feet on paperwork, miss deadlines or are less than 100% responsive to the client’s needs.
For the seller. Inventory is still about 15% below the norm, so it will remain a seller’s market. However, this doesn’t mean your seller can just sign a listing agreement and wait for the offers to roll in. As more and more sellers jump on the bandwagon, the competition will increase. Advise your sellers to be smart about their asking price. Don’t get overly optimistic and set a high price, only to have to lower it 30 days later because you’re not getting any action.
The smart sellers will give their home every possible advantage when they put it on the market. Follow our ten steps to get the home ready to sell. Use a home staging service or get up to speed on staging with the many books and articles that are available.
Be prepared to give your sellers a report on the number of listings compared with the number of closings in the last 30-60 days. When listings start to show an uptrend, prices may be slowing down and you’ll need to make a move.
Sellers will benefit significantly by obtaining their own appraisal. If a buyer’s appraisal doesn’t support the contract price, your deal could be in jeopardy, so be prepared. Put together a written summary of improvements that have been made to the home, especially the less obvious items, such as foundation work or new plumbing.
For the homeowner. If you’ve been underwater for a while, cheer up. You may be less likely to feel like you’re drowning this year. You may not be ready to sell just yet, but this could be a great time to add value by initiating some home improvement projects. Interest rates are still low and this makes home equity loans and lines of credit very appealing. Don’t go wild with swimming pools and home theaters, and do take care of structural needs first. Conventional wisdom says that kitchen and bath remodels recoup more of your investment when you sell, so if you’re going to spend money, that’s where to put it. Then when you do decide it’s time to get back into the game, you’ll be ready.
For the Realtor. That’s you. Start now to get in touch with potential clients so that you’ll be the first name the pops up on their virtual Rolodex when they are ready to make a move. Send potential sellers our 10-point checklist. Send potential buyers the latest trend reports and loan qualification guidelines. Build your email list and send out regular bulletins, local market reports, and sales of note. Use Facebook and Twitter to build a following and keep in touch with (but don’t overwhelm) your followers regularly.
And do have a Happy New Year, all year.