Show - June 6, 2023

Good morning, WFMD listeners. This is Jay Day.

and Christina Day.

With Real Talk Real Estate back at you and hard to believe we're into June. So let's talk about, we've made it through, well, I don't know if we say made it through, but the spring market has come and almost gone. We're shifting over into the summer market. What are you seeing statistic wise for what happened in May?

So it's interesting looking at the statistical data, it doesn't exactly match up with what I feel like my on the ground experience has been over the last month because I feel like we had a lot more inventory and I feel like I'm seeing a lot more competition out there, but the numbers don't exactly reflect that. So looking at Frederick County, as we closed out the month of May, we were sitting at 55 coming soon, which is actually less than the prior month of 76. Now take into account though, and I was just very fortunate and kind of honored to step in and work with some other kind of rockstar team leaders around the country the other day, and I was a guest at somebody else's sales meeting, and we were talking about mindset and the activity and things like that as it relates to what us as agents should be doing. But one of the things that of the other team leaders brought up was that in the summer months, things slow down and every year when things slow down in the summer, we all panic. Even though we've been here for 20 plus years and we know that this is a trend that happens on an annual basis. The reason buyer activity generally slows down and even seller activity slows down is because schools letting out. So in May we actually do see a little bit of a dip typically in foot traffic. And the reason for that is a lot of people are traveling for graduations and things like that. So our weekend activity does kind of get derailed a little bit with graduations and people traveling and that sort of thing.

I mean even the proms and being there for all that type of stuff.

So there's a lot of just our cultural behaviors affect that foot traffic. The second thing that happens in the summer is once school lets out, people start traveling. And now that we don't have all of these restrictions upon us, we're seeing people traveling not just in the United States, but they're also traveling internationally. So we do see that consume people's time and you figure you start seeing people not at home looking and there's only a small window of time for them to really look in order to secure a house in order to get in for the school year.

Yeah, I never thought I'd say it, but I missed the good old days of not having flights a hundred percent packed and the airport not being insane.

I know. So what we're seeing though, over the month of May, as we rolled to the end of May, we closed out with 137 active listings. That was actually only 13 more than we had at the end of April. So not a huge uptick, in fact, I mean that's what, 10% more. So not a huge uptick there. Now the interesting thing was that the median price stayed just about the same on those actives. Now, what did change, and like I said, my on the ground experience felt a little different than the statistical data was. The active days on market went from 20 down to 17. So indicating that there was still some good activity there. Our median price for the area was 569,9.

And then when we look at what went under contract, that was a pretty big increase from 326. It was an increase to 369 but the ones that went under contract had a lower median price than what we saw in April.

449,9. Now, don't take that to mean that the prices are coming down. So a lot of times people see that and they think, oh, the prices are coming down. The prior month the median was 487,250. But what we have noticed, and at the end of the May, you had what I would say more of a moderately priced home go on the market and it had what nine offers at the end of the day, right?

Yeah. We had close to 40 showings and over a holiday weekend.

Which is also unusual. We have these holidays mixed in there. So one of the things to keep in mind is that the lower priced market is really on fire.

Oh, it is because affordability is almost in this area trying to find affordable housing. It's almost non-existent if you can find a single family. And the one you're talking about was a single family, meaning a detached home, and that was in the low threes. And that's almost impossible to find in Frederick County.

Especially if it's in decent move in condition and you can just move your stuff in and live comfortably. The other question I have for you on that, I know we didn't really talk a lot about that, but when you were looking at the offers, was it primarily owner occupied or were there investors that you could tell?

There was not one, investor one that I could tell.

Okay. So the other thing to keep in mind with that is the investor appetite has somewhat shifted, right? There's not quite as much of an investor appetite because investor financing has gotten extremely expensive.

Well, and I think a lot of, if the ones that are going to investors are off market more wholesale type situations. So one of the interesting things when you look at what's sold, and when we say sold, that means a closed. Ownership transferred from one to the next. It was 270 up from 257. And the more interesting part of that is that the median price went from 421 to 478,5. So that's a big jump. And again, that just means that the homes that happened to close in the last 30 days ended up having a little bit higher sales point.

And one of the things when we look at the contract versus the sold price, not all agents will update their contract to what their sold price is in advance. So we do see when things are selling over list price, that's reflected Then once you get your sold data.

Alright, keep going.

So those that sold above list 166 of those 270 sold above list, that is actually 61% of the homes sold, above list price.

I mean that definitely does not show any signs of a slowdown in market.

Not one bit. And then 45 sold below that was only 16% and sold at was 59, so that was 21%. So just a little less than a quarter of the market sold at list, and then only 16% sold below list and 61 sold above list. That's pretty impressive for our market.

And one of the things that I did want to point out for those that are listening, I mean when we talk about median days on market for contract six, sold five, actually those numbers could be even better. Typically what we find is once there's good activity, a lot of the sellers will set a deadline and sometimes they end up taking the first offer that came through, but they wait over a weekend or a three or four day period and then make a decision then get everything signed off on. So honestly, what I'm seeing is a lot of these are happening, could be zero to one day on market, but if you have 35, 40 showings scheduled over the next two days, the standard is, and most people are expecting, I mean from the agent side, I get messages all the time, is there a deadline? And I'm like, I don't set deadlines. It's up to my client. Does the seller want to do a deadline or not? I don't know. We're not going to be presumptive and say we're going to set a deadline before we even know if there's offers coming in. We have an idea. There's going to be, but again, I like to deal with it in real time.

It also depends on how many offers are you actually thinking you're going to get? Because sometimes you could have 30 showings and you could only have a couple people respond that they're potentially interested and then they have to get their stuff together and be able to really present an offer. But the other thing that I've noticed with timing is when did they go on the market? So if you go on the market towards the end of the week, like a Thursday or a Friday, by the time you start having showings and then you have people writing offers, then you generally want to wait a little bit and see what the weekend's going to bring you. If you go on the market early in the week, that could be a really long time to wait for offers.

Yeah, and I mean at that point, people tend to withdraw their offers because of being afraid of missing something else that possibly could hit while they're waiting on an answer. Now, I will tell you one of the things that I noticed with this last transaction that is really important if you're a buyer, and Christina sort of mentioned it with the weekend activity, and then I talked about the holiday. I mean, I know it had to be frustrating for some people because I had a few that were considering writing, but they could not reach their lender. And then we had some others that the agents were not around and didn't have someone available to show the property. They wanted to know if they could do it Monday after the holiday, I mean Tuesday after the holiday. So keep this in mind. If you're dealing with certain situations, you could lose your house or even an opportunity to be able to write on something because you don't have it all together.

And that lender piece is truly important. I mean, us as agents, we should always be available to our clients and we travel, but when we travel, we have somebody in place who can take over and do the things that need to be done while we're away, which is the beauty of having a team. But even if you were dealing with a single agent who isn't on a team, they should have a partnership in their office with somebody that they say, hey, I'm going to be away for the weekend if any of my folks want to see houses, do you mind taking care of them? And that would be a best practice for us as agents. But that lender piece, ooh, I've had it where our lender who we work with on a regular basis, he's available early morning, late night, weekends, holidays. He even has special wifi set up on his boat. So if he's out on his boat over the weekend, he can still do pre-approval letters, run numbers, that kind of thing, because urgency and timing and accuracy is key when you are in the market that we're in.

Oh, definitely.

I've seen others where you're emailing, calling, texting, and nobody's responding.

Yeah, I mean, I had people say, hey, I missed the deadline. I'm still trying to get everything squared away with my lender, but I'm having a hard time reaching them. It's a shame. It really is. Because I tell them, hey, if you want to submit a summary and just put a note that you're still waiting for your lender letter, and then we just tell the seller, hey, here are the terms they're thinking, but we don't have a confirmation that they're truly approved yet. We're expecting it, but their lender's not available right now.

Yeah. The other thing, looking at the lending piece of it, I can tell you there are great lenders out there and there are people who have zero idea what they're doing. We just had one where for almost a month we were being strung along with promises of things having been done and they weren't being done. So it is really important that you work with somebody who is reputable, check their reviews, check the references. If it's somebody that your agent has used before and your agent can vouch for them, great. If you're just finding somebody online, that's a little scary because the reality is this is the biggest piece of the puzzle to bring it to the closing table. So make sure you're working with somebody who's reputable, who is knowledgeable, who is available, who can get the job done.

And the other thing that I would definitely touch on because run into this quite a bit recently on the buy side and on the sell side, when people are not consistent and for example, let's say an offer's written one way, then all of a sudden they want to change the terms and they want to change something else that really makes most sellers feel like the people are being a little flaky, if that's a appropriate word to use. But it gives them concern because, okay, I'm going to do it this way, then I'm going to switch this and I want to change this now. I want to change that. It really does make them uneasy. And I'll tell you in one that I had with multiple offers, one person wrote an offer one way, then changed it, and then kept changing the terms and the stuff wasn't adding up, and they eventually lost the house because my people just didn't have the confidence that they were being forthright. And I don't think it's the buyers not being forthright. I think maybe they may not understand everything. And I mean, I've been on that side where I've had buyers that are being, in my opinion, unreasonable with some of the requests or they're changing things. And I'm like, well, hold on. Are you sure you want to do this because you're going to ruffle some feathers? This isn't how we're supposed to handle these things. So just keep that in mind too. Make sure you understand all of the terms of the offer that you're putting forth. And if you don't understand them, ask your agent to explain your options. So that way you're putting something in there that's upfront, honest, and you're comfortable with it, and then you're not going to feel like, oh, let me hurry up and try and change something.

Yeah, something you feel good about acting upon. Right? Once you're under contract, you're contractually obligated to act upon it. For example, that one you were talking about, if your seller would've just signed off on that right away, that buyer would've been obligated to terms that in fact they were not actually comfortable with which would've resulted in probably a default and the loss of a deposit and potential legal actions and things like that. So always make sure that you are exploring your options and that you truly understand what you're signing. That goes back to your agent being knowledgeable and being able to really inform and explain and guide you through the process.

And I know it's sort of fast and furious, but the one good thing is when you have deadlines that are put in place, you know, okay, I at least can try to, I don't have to have it over in 10 minutes unless you wait until the last minute. But again, make sure, I still get shocked when I meet with clients and they've bought before they were working with someone else and they tell me that nothing was explained, it was just sent over and they were told to sign. And I've had clients that say, I don't need all the explanation. And I'm like, no, no, no. We're at least going to review these and I can summarize this and then I'm going to give you a copy. You're going to have it to review even before you sign it. And then we'll send an electronic version where you can just click away an e-sign. Because most of those programs, they're just not easy. It's easy to sign, but not easy to read and sign.

Right.

It's made. Or if you send it over and you get signatures back in two minutes, there's no way they read those 40 pages.

No, they did not. And that's part of our process is, and all of our agents on our team do this when they're writing an offer, they prep it, then they get on the phone and they go over it together and make sure, are these all the terms that you're comfortable with and good with? And sometimes there's changes that need to be made or things that need to be explained further during that process. Then it gets shared for signing. Once we know we're all good.

Yeah, I mean, that's the phone call, the face-to-face, or for others, we'll do a Google meet and we'll end up doing the updates live. There's certain things we don't even have pre-filled out. We're like, okay, here are all your options for inspections. Which do you want to do? Okay, let me hurry up and assign these to you. Let me mark that you're not going to do these. And it just makes it a whole lot, whole lot easier in my opinion.

Oh, yeah. And a knowledgeable buyer is great. And same thing with a seller. When we have the offers come in and we have to go over them with the seller explaining all the various terms and explaining the contract and what their obligations are and what this means is key before they sign it to make sure that they're comfortable with how that unfolds. And there are a lot of different ways that an offer can be written. There's different forms that can be used, and each form has its own caveat. So in this area, we use the forms provided by the Maryland Real Estate Association or Board of Realtors, and that is a specific set of forms. Well, in neighboring areas like Montgomery County, they use what's called a GCAAR form, which is the greater capital areas forms. The greater capital areas forms differ from the Maryland forms and the terms differ. And I actually had one recently where they use the greater capital area for the inspection. And the difference is the buyer did not have a right to terminate. The other difference was how quickly my seller had to respond to their requests. So in Maryland, it was five days. In the GCAAR form, it was three days, and it was by 6:00 PM so it wasn't even the full three days. So it's really important that your agent understands the form that they're using and understands and explains to you what that means to you as the seller or the buyer. Right. So timing is everything. So a couple other things, just on the statistical data, I was noticing Washington County had a really big uptick in their May sold activity. They went from 93 sold in April to 136 sold in May. That's massive difference.

With the $10,000 median price

Change

Modification on the upside.

So the median price there was 295. So for those who are looking for something that might be a little bit more affordable, Frederick County, where we're based out of is a little bit pricier. The median for the solds, there was 478. If you're looking for something a little more budget friendly, then you might want to hop over the line into Washington County where the prices are a little bit more affordable across the board. As you can tell by the median price, it does look like their contract activity and their active activity contracts were pretty flat and their actives were up a little bit. So things are being absorbed there based on that sold data. So that's good. Now the closing help talk, right? So we're talking about buyers knowing how to structure an offer. We're talking about getting something accepted.

These numbers shocked me. It was not what I expected. I thought they would've been lower.

So in Frederick County, 21% of the solds had closing help of some sort.

And this is only resales. And I mean, I know I've looked at, we haven't had any that I've seen, so I guess it's all relative to the world that you live in. And I'm not saying that we negotiate differently or whatever, but I was really shocked. I haven't seen in any of the counties any closing help on our listing side in, I don't even know how long it's been.

And so I can tell you the couple that I've had where, and I know there's one that's not closed yet, where I do have a small closing help, it's for repairs. So it wasn't a we're going to pay your closing costs. It was, instead of having to deal with the repairs, we'll just give you a little credit, you deal with the repairs, and we'll all move on with our lives happily and easily and quickly, because waiting for contractors to be able to do things can also be really tough these days. Now in Washington County, the number that had closing,

I don't think, did you give the percentage for Frederick County?

Yeah, I sure did.

There's those husband years,

So 26 and a half percent in Washington County, so a little more, a hair, more than a quarter of the homes had closing help there, which is kind of surprising. And we also saw that trend continue into the neighboring West Virginia counties as well as our neighboring Pennsylvania counties in a similar percentage. So just keep that in mind that you might, if you need closing help as a buyer, I think a lot of that depends on the listing that you're looking at and the other terms that you're bringing to the party. But it's not that it's completely out of the question. Right.

Yeah. One of the other things that I think a lot of people don't understand, because again, looking at the multi offer situation that I just had, not all sellers are going to make a decision solely based on sales price. There's a whole lot of other factors that go into that, whether it's waiving inspections, only doing certain inspections, doing a ton of different inspections. If they're doing well testing, are they just doing testing for potability or are they also wanting to do yield? There's a whole huge amount of pieces that can go into that. And then also the same thing. Sometimes you have these offers that the number is so crazy, and if there's not an appraisal gap guarantee or there's only a guarantee of $5,000 and there's no way, or there should be no way that home appraises because based on what that price is, you see what else has sold and what's out there, and they were bigger, more updated. I think where a lot of agents go wrong is they push on the pricing side from the buyers instead of trying to figure out from the agent what is going to make their contract more appealing. And it's not up to us as the listing agent, but we know what our sellers are looking for.

We know their fears, we know their motivation.

Yeah, I mean, it's funny because this one client I had recently thought they wanted a post-settlement occupancy, also known as a rent back, and one of the offers had 45 days at no cost. But my people were like, well, I don't really need that now. But that actually does equate to a number for someone if they didn't want to have to put their stuff into storage or things like that.

And think about this, there's a lot of clients out there who are sellers who haven't found a house yet, or they are making long distance moves or they're going to have to go into temporary housing. The people who I know have the biggest challenge and who really benefit the most from those rent backs are people with multiple pets, because finding a short-term rental that will accommodate pets can be the hard part for them. So being flexible as a buyer to accommodate a seller's needs is often very appealing to that seller. And it might not always be a dollar amount.

I mean, you're not getting, I can't say you're not, but the odds of getting a home if you're selling and buying, most people are having to sell first and then buy later. Because trying to get a contingency accepted is almost impossible unless you happen to be a unique property that happens to be on the market later, a longer period of time, or there's a whole lot of pieces that have to fall into place to be able to get something like that accepted.

Yeah, exactly. So let's talk a little bit about rates because wow, this also is going to affect us in the coming month. Over the last month, we saw rates go from 6.125 on a conventional and 5.75 on a government. Okay, government loans, FHA, VA, USDA. We had something with a five in front of it. And for our conventionals, we had something in the very low sixes, which could have easily been bought down into the fives with some discount points. Over the last month as we closed out May, that went up to basically 7% on a conventional and 6.5 on a government.

And that's with no points.

That changes things dramatically for people. So let's go back to revisiting. If you had a home loan of 450,000, the difference between a 6% rate and a 7% rate is about $295 a month. That's sizable, right? When we start thinking about the shift. Now, where that really impacts people is when we start thinking about, okay, you go, okay, well, is $300 a month really big deal? It is when it's in reference to their debt to income ratio that the bank is looking at, and it is when you're pushing the envelope on your price,

And I mean just what people are now having to pay for their groceries for their gas, that money has been that what could have been considered discretionary money has been pulled in other directions to be able to afford simple things to survive. Like

Food.

Yeah. Yeah.

Food bills have definitely gone up. Now, put into perspective, an $800,000 mortgage, which in our area, 800,000 is not something we don't see on a regular basis. There's many, many homes that fall in that 7, 8, 9. There's a difference of over $525 a month. That's a modest car payment.

So basically the big thing to keep in mind is these interest rates are impacting things. It takes about a month to two months to see what that impact is. But if you have any questions, if you're interested in just trying to figure out what to do, what makes the most sense, please feel free to reach out to us. You can visit us online at dayhometeam.com. That's dayhometeam.com. Or you can call us directly at 866-702-9038. Again, 866-702-9038. I'm Jay Day.

And Christina Day

With Real Talk Real Estate. We'll be back with you in July, and we hope your summer gets off to a bang and any questions you have about real estate, don't hesitate to reach out and have a great one.