90% of my real estate practice is working with sellers and because of my approach to the business, I gain exposure to lots of agents representing buyers. This spring, it’s been typical to have 20+ showings on homes, which means I interact with all the agents and listen to their feedback. One recent morning, I had the following text exchange with a buyer’s agent.
Me: Everyone seems wary about multiple offer situations
Other Agent: That’s cuz we are all so TIRED of them!!!
It’s true, when you make offers on 8 properties and get none accepted, it is going to take a psychological toll. The financial toll of not purchasing in early 2022 might be even greater, as interest rates have risen so dramatically. 30-year mortgages are up over 5% now, where at the start of the year they were under 3%. As rates started to rise, mortgage professionals were projecting highs of 4% in 2022, and we blew right past that! At some point, market demand will begin to erode, and I am seeing it on a micro-level.
In April, I had an agent that previewed my listing at 395 Holly drive with one of their buyers. We had already accepted an offer on the home after 5 were presented. The house was an adorable mid-century modern style, and the buyer was trying to compare it to an off-market listing in the neighborhood. The agent called me to say her buyer had called her mortgage broker while she was in the house and only then realized that her potential mortgage payment had gone up $1,000/month due to the interest rate increases! The buyer wasn’t giving up her search, but she would need to modify her expectations. She also should’ve been checking in with her mortgage broker more often, especially in our current market environment.
Another agent, whose client lost out on several homes this spring, called me for another listing to say her buyers were ready to give up and consider renting. They were still inclined to write an offer on one of my houses, but only if it got no other offers. The buyers were clearly at the end of their ropes. One thing I’ve learned in my real estate sales career is not to give up. It’s that one offer you didn’t make that could have gotten you the house you truly wanted.
Yet another agent best summarized the situation when she said, “Buyers are tired of missing out.”
I was working with an investor couple when the market last bottomed out in about 2010. We made offers on 16 Sonoma County condos before we finally got one accepted! That was brutal, but they finally realized what it took to get their offers accepted and proceeded to buy several more condos with me. The condos they were purchasing for between $50,000 - $70,000 are now worth 4-5 times what they bought them for, and meanwhile in the years between the rent has generated great cash flow. The moral of that story is to never give up.
If the market begins to slow, it’s going to be an ideal time to buy. Would you rather buy when the market is white hot and there are too many buyers competing for too few properties? Or when you have more choices and less competition? It seems like the second half of 2022 there may be some great opportunities for home buyers. They just need to continue working through their fatigue.