It’s also all about cycles. Cycles and basic science. What goes up must come down. Taking what we’ve learned in the past decade, one can only hope that lessons were learned and mistakes of the past won’t repeat themselves. Having been in the past cycle of an explosive market, I can say truly it’s more controlled now than it was 10 years ago.
First quarter numbers in Flagstaff are rarely impressive. This first quarter of 2016 proved otherwise. Those in the business for more than 10 years know to be a little apprehensive. What is deemed initial excitement over a great market quickly turns to fear when looking at how steadily the numbers are climbing.
This is not meant to scare anyone into not buying. That is not the case at all. Owning real estate is still a very sound investment. Sure, you may pay a little more right now, but that’s true of everything, especially renting, in a good market.
Preparedness is key in this market. Meeting with a local, qualified lender ahead of looking at any properties is essential. Having your financing in order makes for a smoother transaction. Knowing what your budget is, knowing your down payment and closing costs figures up front will help to alleviate stress and surprises the further you get into the process. Not only does this make for an easier transaction for the consumer, it’s imperative to have your financing lined up before submitting an offer. If lenders are requesting certain documents, they’re not being nosy, they are needing those docs to do their job. Get them what they need. You play a key role in the speediness of your loan process. Sellers are receiving multiple offers on properties these days. Listing agents, in doing their job, will advise sellers to look at which offer is the strongest. Some key components in this will be: who is the lender (is the lender a local, reputable company?) how much earnest money is being put down? Typically, EM is around one percent of the purchase price. How long is the escrow period? Shorter escrows are usually of interest to sellers, as they mean less time for something to go wrong.
Another factor to consider in this changing market is what repairs need to be done to the home. In these types of markets, we tend to see a resurgence of the ‘As Is’ Addendum, which is a written notice (usually up front) that the seller will make no repairs to the home. It does not relieve the seller of disclosing known material facts about the conditions of the home, it simply serves a purpose of letting the potential buyer know the seller will not be making repairs. A seller is going to be less likely to agree to certain repairs in this market.
Be wise when looking at properties. Have a good, clear idea of what you want and know what you’re willing to compromise on. Don’t be discouraged if you lose out on a property or two. This is typical when inventory is low. Once the word gets to more and more sellers, they will start listing. The inventory will increase. Inventory tends to increase in Flagstaff during the summer months. The weather is cool and mild, kids are out of school, etc. Work with a knowledgeable realtor that truly listens to and understands what you want. Work with someone who is responsive and able to negotiate under a strict deadline. Don’t call multiple agents, it muddies the waters as to whom the client is working with and ultimately makes your transaction more difficult. There should be one agent working for YOU. If you aren’t getting the service you need from that one person, let that person know and move on to another. Know that the decision of what price to offer, what repairs to request, etc. lies within your control. Your agent is there to guide you and achieve the desired results, but you are in control.
Same goes for you, sellers. You are ultimately in control. What price to list your home, when to schedule showings, etc, but know that listening to the advice of your realtor will ultimately lead to a smoother transaction and a faster close of escrow.
By Sherri Monteith