You've probably heard. We're in a challenging real estate market. Yet, despite the hyperbolic news, it's NOT all craziness. Many of House Einstein's recent buyers have successfully locked down stellar properties without overpaying. Admittedly, a few others continue to struggle, especially those shopping for entry-level detached houses. We'll help them get there, eventually.
Perhaps this will surprise you, but sellers are also struggling to make the call. The question: is it smarter to sell into a current hot market, and liquidate capital for other needs, or hold and see if prices keep marching upward? Several of our past clients have confided that they would consider selling - if they had somewhere to go. Meanwhile, a couple of our sellers even pulled their listings this year - one mere days away from hitting the "go" button. We don't blame them, we actually encouraged them to consider it. Trading real assets for depreciating paper currency may not be the smartest move right now.
It's as if the entire country woke up at the same time and realized that dollars are a horrible store of value. This isn't exactly new information to those in the financial community. The problem is that awareness has increased precisely at the same time that homeowner needs profoundly shifted.
Nationwide, an improving job market and economy emerging from recession is fueling extremes not just in housing, but in prices for all things. The question on everyone's mind: How long will this last? Are we seeing the beginning of a strong inflationary cycle or is this simply a short-term anomaly driven by a perfect storm of events. How will the Federal Reserve respond? This week, we got a strong signal.
Remember: When it comes to real estate, it's not a question of "if" the market corrects. It's a question of when and how far. The last downturn may be a distant memory for many agents, or non-existent for newly minted ones, but I was there. Weaker locations and thinly traded property types dropped in value rapidly, while others held value. Yes, even in the proverbial Boulder bubble. Expect it to happen again.
The answer is to make intelligent, disciplined, long-term real estate decisions based on deep market knowledge. Do not overpay for compromised assets. When contemplating how much to offer, recent relevant sales are your guide.
The table above is a real-life analysis we did for a buyer who was contemplating writing an offer. We analyzed the most relevant recent sales and advised our buyer that the recent median paid over asking was 6.8% - for this particular property type, price range, and location.
In this deal, 6.8% over the list price represented a proxy for 50% probability, or the flip a coin scenario. Offering less for a desirable house, where multiple offers were anticipated, meant a lower probability of success. This is assuming equality on other terms. I won't go into further detail on how we compete on those terms, because it compromises our clients, but suffice to say we've had a very good recent track record of success without being the top offer.
The median premium paid for relevant comparables is an incredibly useful statistic. Seriously, don't go into your next bidding war without it.
p.s. If your agent is struggling to offer you effective, actionable guidance in today's market, give the House Einstein team a call. We're happy to offer you fact based advice on market conditions (why us).
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.
Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
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Thinking about buying or selling and want professional advice? Call us at 303.746.6896. Your referrals are deeply appreciated.
The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
Fresh Listings | Our review of the most compelling new listings to hit the Boulder real estate market.| Subscribe
Thinking about buying or selling and want professional advice? Call us at 303.746.6896. Your referrals are deeply appreciated.
The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
