When ERA Summit broker-owner Laura Garner spoke to Inman in May, her team was on a rollercoaster.
Laura Garner
Garner, who leads 40 associate brokers in Albuquerque, said the year started like a rocket, with her team breaking brokerage sales records. However, her team lost steam in March, leading a disappointed and confused Garner to dive into market intel to figure out why sales tanked.
However, a month later, sales boomed as quickly as they’d dropped — renewing her hope for a solid sales year.
“Oh, yeah, I remember that,” she said of her interview with Inman in May. “Thinking about the changes since then, it’s been interesting. I feel like [Albuquerque] is doing better than the national market.”
“But we’re now in what I’d call a tale of two markets. It’s just kind of that push and pull,” she added. “So many buyers think they have the driver’s seat, and sellers think the same thing. And so, you know, both sides can’t necessarily win.”
Garner, along with brokers in Sacramento and Boston, said the fall homebuying market is poised to be better than the summer, which saw existing and pending home sales struggle to gain momentum, despite rising inventory levels and cooling home price growth.
Mortgage rate fluctuations and economic anxieties still present challenges, but the biggest hurdle, they said, is managing buyer and seller expectations in a market inching closer to a long-awaited balance.
Bringing sellers back down to earth
RE/MAX Executive Realty broker Bill Gassett said sales in Greater Boston have been “much slower” heading into the fall; however, that’s only in comparison to the pace of the past five years, where Gassett regularly saw homes go under contract within 48 hours for five to six figures over the asking price.
Bill Gassett
“The last five years have been unprecedented, crazy seller market. It’s starting to become more balanced for sure. There’s more inventory now than there has been in years,” he said. “But I wouldn’t call it a buyers’ market just yet. My area is still favoring sellers; they still have a bit of an edge. But, [sellers] can’t have the same expectations they had five years ago.”
Gassett said many sellers are still expecting homebuyers to enter bidding wars and waive inspections and contingencies. Although some towns within Greater Boston, like Hopkinton, offer a stiff competitive landscape for homebuyers, Gassett said buyers are no longer willing to put their necks on the line for a home.
“If a seller puts their house on the market at the right price, it’s still going to sell fairly quickly and they’ll do very well,” he said. “But the seller might have to make some compromises that they weren’t making in the past. Home inspections weren’t even happening over the past five years. But now they are.”
“If there is a reasonable request that comes up, a seller is more likely now to respond to it and address it [rather] than just saying, ‘No, sorry, I’ll ask another buyer and they’ll get the house instead,'” he added.
Jessica LaMar
House Real Estate agent Jessica LaMar seconded Gassett’s insights, saying that homebuyers are more willing to walk away from properties that are overpriced and aren’t in turnkey condition.
“It’s about getting sellers to a reasonable place. And that can be a little bit of an uphill battle right now,” she said. “I think what sellers aren’t realizing is if you price too high, just because you think that’s how much your house should sell for, it could be detrimental. Your house will sit on the market, and you could end up selling it for 10 percent less [than what it’s worth]. But if you just priced within the comps, you could have gone above.”
LaMar said she urges sellers to make necessary repairs and minor upgrades, such as new paint and fixtures, to make their house stand out. That, paired with a fair price, can still create a multiple-bidding situation for sellers.
“I had a listing comped at $475,000, but we priced slightly below at $469,000, which is a lower price point within Sacramento anyway,” she said. “That brought in a bigger buyer pool, and we ended up receiving four offers. They trickled in over about 10 days before we went pending, which was a bit slower than we expected. But we did end up with multiple offers that we were able to negotiate with, which is a win.”
Helping buyers harness their new power
Just like sellers, Garner said buyers need to adjust their expectations for the coming months. The broker said headlines about rising inventory and cooling home prices have set homebuyers up for a potentially hard lesson.
“Four hundred and twenty thousand is the average price, and the median is maybe $370,000. So, for a first-time homebuyer, it’s really hard for them to get in,” she said. “I do also see, though, that buyers are fairly unrealistic in some of those lower price points, like looking for something move-in ready or something where they don’t have to do any repairs or updates. And that’s just, you know, that’s a unicorn of a listing.”
Beyond expecting to underbid on turnkey homes, Garner said buyers are unaware of how the scales can tip in and out of their favor depending on the market segment they’re looking to enter. Buyers in the starter market should be prepared to compete, which may mean putting in a bid right at or a little over the asking price. Meanwhile, buyers looking for listings at the higher end of the market may have more leverage to get what they want.
“We are kind of in that mixed market,” she said. “It really depends on the area or the specific home that a buyer is looking at. If they’re considering that entry-level price point or a highly sought-after neighborhood, there will be more competition, and they’re likely to not get as many repairs or concessions as they might want.”
Gassett said homebuyers in Greater Boston are facing a similar reality check, as their negotiating power varies widely from ZIP code to ZIP code.
“The dynamics really can change from one town to another,” he said. “There still are pockets where there’s really hardly any houses for sale. So it’s not like I could say that it would be impossible to see a bidding war right now.”
“There still could be in certain towns and certain price points where there’s really not much for sale, that you could have multiple buyers competing for the same house,” he added. “On the other hand, there are pockets in the market where there’s plenty of inventory, where a seller couldn’t expect to get multiple offers or might have to compromise and sell for less than what they’re asking. So it really is dependent.”
LaMar said she helps homebuyers think about their “flex number” by calculating what their monthly housing costs would be at different price points, so they know how much room they have to be competitive before overextending themselves.
Garner said buyers’ agents must raise their negotiating IQ to help their clients be successful, whether it’s knowing when to ask for a price reduction or back off unrealistic requests so they can get their foot in the door.
“Because the days on market are increasing, there are some spaces that buyers can negotiate in with those homes that have maybe been overpriced,” she said. “And if they can hit a seller at the right time, where a seller is, you know, depending on what their situation is, you know, a seller may be more compelled to a price reduction or a concession or something, or maybe doing some of those bigger repairs.”
“Both sides are going to have to give in, and there has to be some really good negotiating,” she added. “That’s why I think right now, more than ever, working with a licensed Realtor that is skilled in negotiations, regardless of if you’re a buyer or seller, is the number one thing that you need right now on the market.”
A promising start
Garner, Gassett and LaMar said the first weeks of the fall homebuying season, although slower than previous years, hold a lot of promise.
“August can be a slow month, and then things pick up in September, which, I feel like, was slower this year,” LaMar said. “I think it was just that there were variations in the [mortgage] rate, and the headlines on the news channels were kind of creating a little bit of fear.”
“But October, I feel really good about, actually,” she said. “I think there’s some movement and there’s some really good inventory coming on the market. And people are getting into a mindset like, ‘OK, we’re ready to make a move.'”
Garner is concerned about the government shutdown and whether it may influence buyers and sellers to pull back from the market. However, she’s hopeful that a booming new residential construction market will encourage consumers to power through their anxiety.
“Builders are offering so many great incentives and super competitive interest rates, and so people are starting to open up to that part of the market. [Builders] are offering lower price points and filling that need,” she said. “There’s not as much as we need by any means, but I think that could help keep the market going.”
Gassett said he expects the Greater Boston market to perform along historical norms, meaning deals will get done, just at a slower pace than the past five years. However, if the fall market underperforms, he said there’s always the spring.
“Fall is pretty similar to the summer, and once you get into winter here, it’s kind of a ghost town as far as real estate transactions go,” he said. “And then once we get to the end of February, beginning of March, things start to really pick up a lot. So I always counsel my sellers, if they don’t have a set time frame where they need to sell, it’s always OK to wait.”
