Happy New Year! Or should I say Happy Spring? Let me explain …
Now that January is here, I find myself having the same conversation with buyers and sellers that I always do this time of year. It usually starts with the question “How is the market? I’m thinking of buying/selling in the spring.” I frame my response this way: I have observed an interesting phenomenon in real estate each New Year. In any given January, there are buyers who have decided to purchase a home that year. And there are sellers who know they want or need to sell that year. These two groups of people behave very differently, creating an imbalanced spring market that can be frustrating for everyone.
On January 1st, the buyers will wake up and open Zillow to start looking at what is on the market. It starts off as simple curiosity, but they quickly start to see homes they like and that motivation to buy a home starts to grow. They start to notice that the homes they like are selling to other buyers and that disappointment motivates them further. Then they begin attending open houses and, since the inventory is extremely limited and this same phenomenon is occurring with other buyers, they see the throngs of people searching for parking and rubbing shoulders at each home. Their motivation to purchase a home begins to feel more like desperation to purchase a home. And it’s only January 15th.
The sellers will have a much more relaxed approach. On January 1st, they will open Yelp and start to research contractors to help them with all of the projects they want to complete before they put their home on the market. Their list of to-do’s might be long and daunting, and they may not have budgeted for all the work. In no rush, they figure they’ll just do one project at a time as they can afford it. It’s frigid and snowy outside anyway and they know how much better their property will look in late April or early May, when the grass is lush and the flower beds are in full bloom. The sellers assume that buyers won’t want to come out in the cold and that they’ll make more money if they wait until the house looks its best to sell. Plus, the kids need to finish the school year. By the time they are ready to list it’s nearly July and many buyers have already purchased homes or are on vacation.
If I am speaking to a buyer in January, I have to break the unfortunate news that no, January is probably NOT the time to get an amazing deal on a house. Even the house that has been on the market since November, because there are almost certainly more buyers out there looking than there were in November. And there is definitely less inventory now than there was in the fall. More demand and less supply = higher prices. That said, if you have your “ducks in a row”, you’ll be in good shape to compete for the house you want. That means: a) Hire a great real estate agent! The market is getting very competitive and you’ll want a professional to help you navigate it. b) If you own a home that you have to sell in order to buy, sell it now! Low inventory and increased buyer activity makes home sale contingencies very unattractive to sellers. c) Get a pre approval letter from a local lender with a great reputation. Having all of these things in place will enable you to close quickly, which is what most sellers want!
If I am speaking to a seller in January, I say LIST NOW! Please believe me when I say the cold won’t keep buyers away. I have trudged through knee-deep snow to show houses, and others will do the same. What about your to-do list? Most of what is on there will not keep buyers away either, and the highly motivated buyers who are out there may be willing to overlook deferred maintenance. There may be a few low-cost items I’ll recommend that you do, or other big-ticket projects I’ll recommend offering a buyer credit for, but it’s very possible that the cost benefit you’ll get from listing now while inventory is low outweighs the return you’ll get from getting your house in perfect condition and listing later. If finishing the school year is important to you, consider a short-term rental that will allow you to stay in your town after you sell, and still take advantage of the competitive late winter market. An experienced agent will help you strategize and simplify the process.
So, bottom line – call me to set up an appointment! Let’s talk about your goals and I’ll help you make a plan for achieving them. There is no need to feel overwhelmed! That’s why you hire a professional … it’s what I do!