Mike Singletary, professional football player and coach, was once asked what his favorite part of the game was. A question to which he quickly replied, “the opportunity to play.”
But in order to be able to play (and play well for that matter), you need to know the game. You need to know the rules, the players, the stats- you need to show up prepared. Ready to win.
And, here comes the analogy…
Much like the preparation required to play the game of football, those that want the opportunity to play and to truly compete in today’s real estate market need to know how to play the game. As the game evolves, so must your strategy. The days of bidding wars, and “overvalued” offers are over for now, replaced by transparent pricing, contingent offers and a return of buyers to the negotiating table. Both buyers and sellers are being forced to adjust their expectations in order to win.
The New Rules for Sellers:
Know Your Competition
Now more than ever sellers need to be savvy. Choose an agent that knows your market and discuss recent transactions with him or her. Buyers are taking the time to study the market- so should you. Don’t expect buyers to entertain inflated list prices. If you wish to sell fast, price it right. Be transparent and be realistic.
Reset Your Expectations
The market has reset and your expectations must to. The average days on market has increased to 42 while price reductions are becoming more commonplace (up 200% from last year). Don’t expect to sell within days of being on the market and don’t expect multiple offers within a week of being on the market. Quick sells and multiple bidders are still happening for select properties albeit rare. If you want to be a serious seller, you can’t play by the same rules from 6 months ago.
The New Rules for Buyers:
Negotiate Your Terms
Take time to put together a fair offer, be diligent, and if needed, don’t be afraid to include contingencies. More and more sellers are compromising in order to close. For example, don’t forego an appraisal contingency if you feel there is a chance the house won’t appraise or a property contingency if you feel the condition of the house warrants further inspections. Take your overall affordability into account and ask for what you need. Today’s sellers are more apt to negotiate.
Don’t Sit on the Sidelines
Be patient but don’t sit on the bench for too long. If you are waiting for the real estate “bubble to burst,” you may be waiting in vain. And as we saw this summer, the market can shift quickly and you don’t want to be swept back into where we were just one year ago. Further, take into account historical appreciation patterns and consider your opportunity to build wealth. In many respects, today’s buyer is in a much better situation than just 6 months ago- with rising inventory and falling prices, you are better positioned to compete and less likely to overpay for what you want.
Here's How to Gain Your Competitive Edge: As we continue to see interest rates rise and the stock market plunge, Bay Area real estate will fluctuate with the volatility of the economy, making it even more difficult to predict what will happen in the coming months. That being said, the Bay Area remains one of the most competitive real estate markets in the United States. The lack of affordability remains high but so does long-term appreciation. Home ownership remains a smart financial investment that allows owners to leverage their current financial position to build great wealth over the long term. Experts agree that the Bay Area real estate game will always be lucrative, and to echo Mike Singletary’s words, we all deserve an opportunity to play. But in order to play and win, we need to continue to study the playbook. Here's what you can do:
Rabello Group