Show - April 1, 2023

Jay Day:

Good Morning, WFMD listeners. This is Jay Day with Real Talk Real Estate and welcome to the month of April. Wow, time flies.

Christina Day:

Yeah, Q one's done.

Jay Day:

Q one done. I like that. Yeah, Q one is definitely done and now we're in quarter two and I feel like sometimes it's almost like Bill Murray with the Groundhog Day thing where the market is just so unpredictable, so different. I feel like we've just been saying things are just not normal for way too long now.

Christina Day:

Three years.

Jay Day:

Yeah.

Christina Day:

I'm going to go with three years almost on the money.

Jay Day:

And it's not covid this time, it's just everything else that's going on in the world. There's lots of concerns still and lots of unknowns, but we do know what's happening with the local real estate market, so let's chat about that. Yeah,

Christina Day:

So interesting stats. I actually took a look yesterday morning and wanted to get an idea. Now, yesterday being the last day of the month, there of course will be other activity that would've posted, but as of yesterday morning when I took a look, there were only 49 coming soons in the entire county of Frederick. That is not a lot now, that is more than what we've had in the recent past. However, still not a lot. And I know that when we're thinking about what coming soon looks like, guys, not all agents put their properties in coming soon. So that's true just as a heads up.

Jay Day:

And there's a limit of how early you can put those in.

Christina Day:

So you have a maximum of three weeks. And we generally will put ours in with about a two week lead time so that our listings are getting attention and people know that it's coming and they can plan to come see it. Especially with as starved as we've been for inventory, we feel like it's a really good idea for agents in the public to have a sneak peek at what is coming forward so that when they can plan ahead, because you definitely, as we talk about the topics today, you definitely want to plan if you're looking to be in the door on day one.

Jay Day:

Oh yeah. And I mean if we were allowed, we would put the stuff out in as much advanced notice as possible. There's just some rules and regulations that prevent us from doing that. And we always encourage on our coming soon stuff once it goes live, we love having the other agents in showing it to their clients. We just want to get as many people through the door. And we know, I mean, we have agents on our team that only work with buyers. We know what buyers are experiencing in this current market.

Christina Day:

Yeah, absolutely. Now the median price on those coming soons is hovering around 485.

Jay Day:

That's an increase.

Christina Day:

That is an increase. So it sounds like we some hopeful optimistic sellers out there, or potentially some of the pricier homes that might be coming on the market as opposed to just the lower price stuff. So we'll see how that pans out as we move forward through Q two. Active listings, there was 137 active listings. And so when we really think about the inventory that we've had, that's not a lot of homes to choose from. When you consider that is all resales in the county.

Jay Day:

And in the county. We're talking Frederick County.

Christina Day:

Frederick County, all price points.

Jay Day:

This includes just so everybody knows condos, town homes, detached homes,

Christina Day:

Single families with little lots, single families with big lots, homes that are a hundred and change homes that are 2 million. The whole gamut, that is not a lot to choose from. And I remember five years ago if you had a buyer and you'd be running around showing 'em you had 15 properties, you could have showed 'em in one day and gone back next week and had 15 more properties to show 'em next week. So when we talk about what these inventory levels really look like, there's a lot of people out there who do want to buy.

Jay Day:

Oh yeah. I mean the demand has not slowed down at all. No. And we're even seeing it with in new construction, we don't talk those numbers, but there's still a good amount of sales that are happening now as it pertains to new construction. We're seeing some spec homes, which means the homes are almost finished or they are finished becoming available. And that's just the result of the change in interest rates for people who went under contract a year ago, 10 months ago, unfortunately may not qualify for that home anymore. So that created some quicker move in homes. It wasn't that nobody wanted it, it typically ended up being a situation where the person couldn't qualify or couldn't afford it or just wasn't comfortable with the payment, with the big change in interest rates that happened.

Christina Day:

And just so we can kind of touch on, because that actually is one of the things I wanted to talk about was how we look at statistical data when we're evaluating what the inventory levels and the sales look like. And I know we had been listening to some other folks talking about statistics and their statistics sounded drastically different than our statistics. And my mother worked for Westinghouse as her career and she helped build radar for fighter jets and things like that, which was actually pretty cool growing up with a mom who was kind of a brainiac. And so one of the things that she had told me about statistics, and it always stuck with me, was her boss would come and say, I need you to put this in a report and give me the statistics. And she would say to him, well, what do you want it to say?

Jay Day:

Yeah,

Christina Day:

So you can make statistics look like whatever you want it to look like based on the data that you put in and the data that you choose to use and the way that you manipulate the data.

Jay Day:

And I mean, I think that's important to say because again, almost everybody I hear reporting on stats are including new construction. The reality is we actually did, and we do marketing for one of the largest national builders and we did it for a handful of them. And the part that really I point out is most of those listings are ghost listings, meaning it's this house at this base price on any of these lots. Meaning if you wanted to go buy that today, you could go under contract. However, that price is probably not going to be the same and they are not going to even be able to start building until they have the building permits in hand. So it's not available inventory.

Christina Day:

And here's the funny thing, when we are marketing, when the builders market their new home listings, they're putting out their samples, like you said of examples. You could get this house, you could get that house. You have no true representation of the actual amount of lots that are available. And you also do not get an accurate representation of the days on market because they are sample listings.

Jay Day:

I mean, some of our builders would not make any changes. We'd have 200 days on market and they didn't care about changing it because they were getting a good amount of sales and they're like, hey, this works. And I also say it doesn't give the real numbers on sale price because based on the community, so there's two different mindsets here. One, the builders want to have it at the base, the lowest price possible just to get people through the door. And then some builders, and one of the ones I worked with before, we were looking in neighborhoods and we were advertising base price, but when I looked at what they were selling, everybody was getting gourmet kitchens, everybody was getting bump outs, everybody was getting the basements finished. So I'm like, why are we advertising? They were finding the traffic coming in from the low price listings weren't actually converting into sales, and people didn't realize what the cost would be to have a fully finished house with double wall ovens, with a sunroom, all this stuff. So we made ghost listings with all those features priced in. So until those new construction homes settle, they really make no good representation as to what the true cost is.

Christina Day:

So for those of you who are sellers, who do you really care about? You care about who you're competing with that is like you, right? And who is like you are the resales. You do compete at some level with new construction, but if you're in Frederick County for example, you're not getting into a new construction single family home for under 600,000.

Jay Day:

And I'll tell you we're in the process. One of my other builders, a smaller builder, we're doing a spec home in Lake Linganore and it took about 120 days to get the building permit from the county. So when I said earlier, it may be two months before they built, that's like best case scenario. We're in the process of dealing with another client in Frederick County and we're estimating that one is going to be 90 to 120 days for the building permit as well before they even have the approval to put a shovel in the ground. And I say shovel, it's really not a shovel. They use nice heavy equipment, but you get the point. It's a good visual.

Christina Day:

A big shovel, a really big shovel.

Jay Day:

With a mechanic arm.

Christina Day:

So back to our active listings and keeping in mind that this is all resale, so people who are selling things like yours that have been lived in, driven off the lot, so to speak, average or the median price was at 535.

Jay Day:

Wow.

Christina Day:

So that is a lot more in terms of price. The average days on market for our active inventory is 10, and our contracts, get this 319 contracted homes right now that is a lot of homes under contract. That means that the last 30 days has been really busy, things coming on the market, things getting off the market quickly, the days on market for those contracts, six.

Jay Day:

Yeah, I mean what that's saying is the demand is there. And again, we're lacking supply.

Christina Day:

Yes, so hey, note to sellers, if you're thinking you want to hop on the demand wagon for sure, because people have less options, they can be a little less choosy. And so if your home isn't quite 110%, that's okay. There's probably a buyer out there for it. And I'm going to talk a little bit about what we're actually seeing with traffic and offers and what they've been looking like. So we like to talk about the people who gave up too. So in the last 30 days, we had 56 people give up. They took their homes off the market, and for those who took their homes,

Jay Day:

Well, I just want to interrupt for a second because that number is really shocking because everything we hear in the media and even other agents talk about is spring is the time to put your house on the market. Spring is the best time. During my podcast, I actually was joking, I read an article and it actually pinpointed down to the best week in 2023 to sell your home. And Tom and I were just laughing because I'm like, who in the world came up with this crap of all the weeks? This is the week that you need to have your home on the market based on all of our indicators? And honestly, I'm like, if anything, indicators have proven to be extremely false in the last couple of years. So I digress on that, but it's a little shocking that there's that many people that gave up when we're getting into the peak quote on quote season.

Christina Day:

I have really good ideas on why I think they gave up and I have solutions for them, but the median price on the people who gave up 532, okay, so that's the upper price point compared to the average or the median for actives, it's in line. But for the ones that went under contract, it's actually well above those that went under contract and the days on market for that was 31. Now, that actually is very surprising to me that you would give up after a month.

Jay Day:

I think the challenge is an and I think I know where you're going with this, it's not having the proper expectations or things explained to them from the professional that decided to list that home for them. And we've had homes that have sold in the sevens and eights and the higher numbers, and we tell people, your home, again, based on data currently on the other homes that were in this price range similar to yours, not in a neighborhood, x, y, all these different things. We need to have an expectation that it's going to take 90 days for yours, even though the average we talk about is 10 or 7 because your price point is double that or triple that.

Christina Day:

And it also depends on what it is that you're selling. If you're selling something a little more unique, if you're selling something that's a little further out, if you're selling something that isn't going to appeal to the masses, if your price point doesn't appeal to the masses, there's a certain portion of people who qualify for a certain price point.

Jay Day:

And I remember back in the REO days, there's also the functional obsolescence, let's say. What that means is there's something that may deter the majority of people from your house. You're right on the highway or you can hear the highway. I mean, I remember it was many years ago, we sold a beautiful log home. When you looked at the pictures, absolutely amazing, but you could hear, what was it, 81 or 83, and that was going to take a specific person that wasn't going to be bothered by the noise. And candidly, someone who's looking for a log typically is doing that to get away from everything.

Christina Day:

They want to be in the woods in the middle of nowhere, not on the side of the highway.

Jay Day:

And we've had homes that are on massive amounts of acreage, but they're on, they're 20 feet from the main road.

Christina Day:

Well, it's funny, we actually have a team member who I met because I sold her home.

Jay Day:

That's what I was thinking about.

Christina Day:

And she had acreage, but she was on the main road and her lot was a rectangle that went back and she had enough acreage that she actually had had cows there at one point and everything else, but she had neighbors to each side of her just as close as if she was in a subdivision. That was one of the challenges that we had in selling that house was the person who generally wants 20 acres or 10 acres or wants a place for cows. They're picturing themselves out in the middle of nowhere.

Jay Day:

We've also had homes in Linganore with crazy driveways that have deterred a lot of people, I can't get my car up that driveway and then to get into my house, I'm going to have to park below the driveway and walk up this crazy incline or walk up a million steps with my groceries and everything else. So there are factors that come into play.

Christina Day:

So now solds in the last 30 days, as of yesterday morning, we had 190 solds. Now I expect when we take a peek, it takes people a little bit of time to get their data uploaded. If we take a look, maybe by Monday we'll see, probably a significant uptick because a lot of those 319 contracts are going to go to closing and then the system gets updated. And again, we're relying on people getting in there and updating their stuff. So closings that happened on Friday later in the day might not even show up in the system until Monday.

Jay Day:

Yeah, I completely agree. It'll be interesting to see what those numbers come in at.

Christina Day:

Yeah, so with those solds that we had 190 reported as of yesterday morning at 410 on a median, seven days on market, interesting.

Jay Day:

Seven days. Wow. Yeah.

Christina Day:

Interesting statistics though on how they ended up closing. 48% of them were over list price.

Jay Day:

So we talk strategy all the time, and that's one of those strategies, pricing it at market or just a tadd below can turn into that situation.

Christina Day:

When you push the envelope too far, then what happens is you have 20% of those that sold below, and then we had 31% actually sell at list. And I look at it like this. All of us agents, we love to brag that, oh, we got over this and we got over that. The market is going to take you where the market should take you. And the interesting thing, and I really do want to talk about this aspect of interviewing agents and who you decide to work with, do not pick your agent based on the number that they tell you that they think that they can sell your house for as this sole reason you pick that agent.

Jay Day:

Or if you do, which you shouldn't, but we're not here to tell you what you should and shouldn't do.

Christina Day:

Wait, we are, I mean those,

Jay Day:

What I always used to say, and this was many moons ago, say that I was competing with someone and they would pick someone based on a number, and my honest answer was, I have a code of ethics. I can't even do paperwork of that number because I don't think it's even possible. If somebody can get you that, let me know. I'll take them out to lunch. And when they ask you to reduce, you should have it written in your agreement that you can terminate and call us. We were being honest with you. That's really what it boils down to. Because I have had quite a few people that their homes didn't sell and I didn't meet them the first time. And then when I came in, they were just like, this is so different. No one explained this to me. No one went into these details. No one showed all of the comparables, no one gave me the data. And I was like, well, how did you come up with the price? And they're like, oh, well, the agent asked what I wanted to sell it for. And they were like, okay, I think we could try that.

Christina Day:

And that's the thing. We like to know what it is that you think you want to sell the house for. One of the reasons I like to know that is I like to know how we're going to have to approach this conversation about what it might actually sell for.

Jay Day:

Yeah, we do always ask. And to me, my process is I have my statistics done, I have my number, I have my net sheet actually finished already, and I tell 'em, hey, my net sheet's here, I'm going to hit send. And as soon as you tell me what your number is, because I'm really curious. And then I asked them, so what was your number before I sent you all the statistics? And we went over them and what is your number now? Because most people will candidly say, oh, mine was definitely not right.

Christina Day:

Well, I met with somebody not that long ago and I had sent them, they were actually a repeat client, and they're absolutely amazing, lovely people, and I'm so excited that they called back. But one of the things that we talked about when we were looking at numbers was I sent them comparable sales. I sent them reasons and examples as to why I thought the numbers should be at a certain number. And looking at those numbers, what we're looking at is what has sold in the area. We're also looking at what is active in the area and who are we competing with. And that's all obviously a moving target. And if it's priced, it's a moving target on a weekly basis, and the market itself shifts on a weekly basis. There's weeks that it's super busy and there's weeks that it's super quiet.

Jay Day:

And it's interesting because with these lower inventory numbers, do you remember we used to do comps and there were so many homes you had to sort of part down be like, okay, well I need to take it down to bedrooms. Let me do garage, no garage. And the reality is for what we see is it's no longer just the neighborhood either, because when we're talking about, especially with what's active, because what we're finding, and this is why we're licensed in multiple states, it was not that we're like, oh yeah, let's go do all these. It was to serve our clients. We found out more and more people were like, well, hey, I'm going to look in West Virginia, Pennsylvania, and Maryland, so I'm going to be within a 30 mile radius of work. And those situations calls people to look. And we're like, well, look at what is available in this price point in the surrounding area. This is what you could be competing with for those that are not stuck in a specific spot because of a school district.

Christina Day:

And so you do with this, you have to look further out. I was pulling comps yesterday morning for a client of mine who has a offer, and I was looking at the comparables. I had to go 10 miles out to find similar properties. Now that seems like a really far way to go, but you know what? There just wasn't anything to even compare with in a two mile, three mile, five mile radius really had to stretch. And so we're looking at what do we think an appraiser's going to give you that's based on sold data? And then we're looking at who are you competing with? If I'm a buyer and I'm running around looking for something kind of like what you have or in your price point or in your desired price point. So I like to look at that too. You say your desired price point's 700,000, that's where you think your house might sell.

Jay Day:

Let's look at what is out there at 700,000.

Christina Day:

Exactly. Now how do you compare to what's out there for 700,000 and how long has what's out there at 700,000 been on the market, right?

Jay Day:

Yeah, so if you're listening to the show and you may have listed your home and you're like, I did not, I've never had any type of conversation like that, you may want to rethink things. I mean, candidly, our very direct way is to go through these things. And again, we're not pulling things out of the air. We're not making things up. It's giving you all of the data and allowing you to digest it and then also analyze it, think about it, and then think about it from a data set perspective as opposed to an emotional perspective.

Christina Day:

And that's strategy session, trying to figure out do we list it right around the target? Do we list it higher and test the market to see if we can get something? Do we list it a little below and try to create excessive demand? I can tell you firsthand in the last two months, I have seen this play out even with the lower inventory numbers. I had two people who pushed the envelope a little bit, which is fine. You can push the envelope a little bit. And just so you know, I mean we're going to tell you the truth. We're going to tell you what we really think. We're going to tell you what we think an appraiser can do, and we're going to collaborate with you on coming up with a number that you feel good about putting it out there at. But if your number is too far off from our number, there's going to be a real game plan session as to, okay, we're going to try this, but if this doesn't work, we're bringing it down in this amount of time because I'm not going to let you sit there for a month and become one of those people who got frustrated and pulled their home off the market because you weren't getting the traffic, you weren't getting the right feedback. That's not the goal. The goal is to get you sold so you can get to where you want to go. That's the key. So the two that I had that were actually pushing the envelope a little bit, we ended up with one offer each on those. Now, one of them got a very strong offer because an extremely limited demand or extremely limited supply of what this particular house is, and especially in the location. So it was a really appealing property to one person, one. But what have I always said over the years, I only need one good offer. The second one that I had that was pushing the envelope. Here's the funny thing about this. The location for this house has extremely high days on market. Just the area itself is a low demand area and the days on market is longer. And they wanted to push the number a little bit and totally fine. And when I say a little bit, it was like $10,000 different from what I'm thinking and what they're thinking. Totally okay with that. So we didn't have a huge amount of traffic, which I expected pushing the envelope a little bit in an area where there's already not a lot of quick selling activity expected that we ended up with one decent, solid offer, and it was a lovely transaction. Everything that we've been doing has been a lovely transaction with both of those sales. And it comes down to, you don't always need 10 offers. You can push the envelope a little bit, but you can't expect 10 offers if you're pushing the envelope right now. I had another one, and we priced very much in the right ballpark that weekend. We had, we put it on the market on Friday. By Sunday, we had over 60 parties come through the property. That is a ridiculous amount of people,

Jay Day:

In a short period of time

Christina Day:

Coming through a house in three days. We ended up with seven offers. We ended up, all the offers were of course over asking because they knew they were competing. And if you guys, if you're buyers and knew you're competing, now is the time to be bringing your A game. A couple months ago, if you were listening to the show, we told you you got some negotiation in wiggle room. This is not that party. Okay, we're back to A plus plus game. Come in with your best foot forward and know if I get this, I feel good about it, and if I don't get it, I feel good about it. That's how you know you've done it right as a buyer. So that one, why did it get 60 plus people through location, demand, the price point now being in Frederick in a mid five range for a single family home, that's a high demand market right there that you're going to get a lot of traffic, you're going to get a lot of interest. So the key then becomes your agent being able to negotiate and helping you navigate through all the terms, what are the best terms and what are the terms that you feel good about as a seller. So if you get something that has no inspection and you know that your house is immaculately maintained and cared for, then you don't need to worry about having no inspection. You have a relative expectation that you're going to go through the inspection process easily. And that if there were things that needed to be fixed, that's fine. If you're a seller who doesn't have a lot of money to deal with repairs, then you might be more inclined to go with the one that had no inspection because insulates you from having some sudden out-of-pocket expenses that you might not have otherwise been prepared for or able to take care of. So it's picking and choosing the terms that work best. And agents will ask me all the time when they don't get their client's offer accepted, what was it that we lost out to? And of course, we can't give 'em all the specifics. Sometimes it's price, sometimes it's inspections, sometimes it's timing. I've actually had people pick a contract based on how quickly they were able to get it to go to the closing table.

Jay Day:

Most important to the seller. Exactly. Honestly, that's really what it boils down to. And Christina has sort of broken down a whole lot of information. The bottom line is you need someone in your corner to help you think through things and what makes the most sense. Lay out, here's the risk for this, here's the reward, here's the risk, here's the reward, the good, the bad in all of them. And give. And it's funny because people ask us too, which would you take? Well, we can't say that. We'll just give you all of that information. On that note, we've got to wrap it up. I'm Jay Day.

Christina Day:

and Christina Day

Jay Day:

With Real Talk Real Estate, and we'll be back at you next month.

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