My best advice for my buyers is: Be prepared. Be flexible. Be persistent. It takes a lot of “No”s to get to a “Yes.”
FBN: For homebuyers and sellers, the last year-and-a-half has been like riding an extreme roller coaster. How would you explain where we’ve been and where we’re going in the real estate market?
Rosie: A lot has happened in the last year! Forget about the slow start of 2020 with all the unknowns of the pandemic outbreak, which had homebuyers and sellers a bit shy about pulling the trigger. Now, there’s a high demand with super-low inventory, interest rates are low and pent-up buyers are scratching and clawing to enter the market. That is what’s happening. We also have buyers who are worn out and have given up. It’s just hard for everybody right now. Housing prices are up for numerous reasons – the demand is outweighing supply, building prices are up because the cost of building materials are up, and people are moving here because they’ve learned they can live and work from anywhere.
Freddi: Also, buyers are coming from expensive urban centers like Los Angeles and New York, where they’ve sold their 1,200-square-foot home for $1.5 million. So, buying a 2,500-square-foot home for anything less seems like a bonus. In addition, Baby Boomers are downsizing and coming in with cash, making them tough competition for the first-time homebuyer looking for the same size house. All of this has some sellers now drinking the Kool-Aid in this homebuying frenzy and overpricing their homes, thinking they are going to sell no matter what and they end up not having any showings.
Rosie: I just talked to a realtor and asked how it was going on a particular house. He said it’s still on the market and he didn’t know why. Well, it’s listed for over $300 a square foot. Pricing a house needs to be done at market value based on our comps and seeing what the market will bear. A lot of times when we have that conversation with our sellers, they understand that. That might not be a conversation that everyone’s having with their sellers.
Freddi: I totally agree. I think some sellers are over-inflating the value of their properties because things are selling so quickly. But if you go back and review the homes that have sold quickly, it’s because they were priced right and the buyers drove up the price. When you’re saying, “Oh, well, my neighbor got 15 offers on their house listed at $400,000 so I can ask $650,000,” well, we may have to remind them, the house with all the offers was pristine and priced right. You can’t hike the price for the same floor plan because none of those 15 buyers are going to come by and buy your house. Sellers who overprice their homes are shooting themselves in the foot before we ever put a sign in the front yard. If we have a great listing and price it well, we may have 10 offers. That is when I will prepare a spreadsheet for my sellers highlighting the plusses and pitfalls of each offer.
FBN: Is there any end in sight to this intense seller’s market?
Rosie: One thing about the market, it’s not easy for either buyers or sellers, even though sellers are in the driver’s seat. According to projections, it’s going to remain that way for a very long time. Flagstaff is surrounded by National Forest, it always has been. I like to show my buyers a Forest Service map. With all the state land, National Parks and federal land, we have very few spots in here for private land and that always drives the price up. And then when you put that demand on steroids, well, we’ve really been discovered. We’ve got a vibrant running community. Young people are coming here. People who can work out of their homes are coming here.
Freddi: I think it’s interesting that with a warming climate, our winters are becoming almost nonexistent some years and I’m seeing a lot more retirees come here. They used to say, “We don’t want to live in the snow.” But in Flagstaff, you really don’t have to live in the snow. It’s just an occasional inconvenience.
Rosie: It is. And at any given point, you can drive to Sedona or some other place that’s just stunningly beautiful.
Freddi: What I’ve noticed, too, especially with our second-home market, is that buyers who maybe would take their families to Hawaii or on a cruise are saying, “I just want to have a house that we can bring our family to and spend time together and not have to fly to get there. That translates into the Phoenix people coming here and buying second homes.
Rosie: We’ve definitely seen that trend of “not flying” through the pandemic. People have simplified their lives and found that they can have a beautiful situation without having to get on an airplane.
Freddi: And not having to fly your whole family to Hawaii gives you a lot more discretionary income to be in Flagstaff!
FBN: How can homebuyers improve their chances for a successful offer and compete with cash offers?
Rosie: Buyers can make sure they are qualified for a loan, know how much they can afford and where they want to live.
Freddi: They need to have a wish list. They can say to their realtor, “Here’s my Top 10 and here’s the other 10 that I can be flexible about.” In this market, they are never going to get 100% of everything they want. If they understand that in the beginning…
Rosie: …then they get to live in Flagstaff!”
Freddi: My mantra is, “Make it easy for a seller to say ‘Yes.’” Show that you’re pre-qualified and that you have the cash to pay the difference if the home doesn’t appraise at the level of your offer. Have a quick inspection. Be flexible with your closing date based on the seller’s needs. Work with a seasoned professional.
Rosie: I had that situation just recently with two instances. I had 12 offers on one home and 20 offers on the other. Neither sellers chose the cash offer. I want to give buyers hope that that can indeed happen. Some buyers have been looking for over a year and it’s very frustrating for them. It’s tough for us, too, because we get involved.
Freddi: When your buyer starts crying, it’s just heartbreaking. Sometimes a personal letter to the seller helps. If I have raised my children in this home and two offers come in that are fairly equal, I most likely would be drawn to a purchaser who wants to continue the wonderful memories I am leaving behind. My best advice for my buyers is: Be prepared. Be flexible. Be persistent. It takes a lot of “No”s to get to a “Yes.” FBN
For more advice from The Golden Girls of Real Estate, go to flagstaffbusinessnews.com/tags/freddi-paulsrud/.
Rosemary “Rosie” Lamberson is a real estate agent with Russ Lyon Sotheby’s International Realty. Her office is located at 1750 S. Woodlands Village Blvd., Suite 200, in Flagstaff. She can be reached at 928-853-3626 or rosemary.lamberson@russlyon.com.
Freddi Paulsrud is an associate broker with Russ Lyon Sotheby’s International Realty. Her office is located at 219 N. Humphreys St., in Flagstaff. She can be reached at 928-853-3737 or freddi.paulsrud@russlyon.com.