The Greater Fort Worth Association of Realtors (GFWAR) reported that 50 percent of all active listings in Fort Worth had a price reduction in July.
Obviously, Toto is not in Kansas anymore. We have highlighted this balancing of the residential real estate market frequently in Tarrant County Tuesday. It shouldn’t be a huge surprise to say that the real estate market has definitely changed from earlier in 2022.
Let’s look at how the players in the market are reacting:
Certainly, sellers are bummed out the most now that the days of multiple-multiple, way-over-asking offers, and single-digit days on market have simmered down. That is not to say that multiple and over-asking offers no longer exist because they do. However, the majority of homes currently on the market are staying on the market a little bit longer (Oh no … 30 days!).
With a 40 percent increase in listings from July 2022 compared to July 2021 it’s evident that sellers are trying to catch the tail end of the frenzy … but they just missed it.
Pricing a home at the beginning is so crucial. Yes, sellers and their Realtors look at recent sales data to come up with a good price, but that can be tricky. Less than 90 days ago homes were going for over 100 percent of the asking price, and on the market for a few days. If all sellers and their agents do is look at recent data that can be misleading and lead to mispricing the home to sell.
There’s no shame in trying to get the most money for a home. There’s no shame in having to reduce the initial asking price. Sellers and their agents need to discuss early in the relationship a strategy to respond to the market.
For instance, if a home has double-digit showings the first week it’s active but no offers, the market is telling you something. If the home sits on the market for 10, 20, or 30 days with ample showings but no offers … the market is telling you something.
Sellers and their agents need to pay attention to the signs and have a unified plan to be proactive in reducing the price or improving the product so that it will be more attractive to buyers.
Do you hear that? It’s a huge sigh of relief from buyers all across the land. It’s been a blood bath for the past 20-plus months and there are many buyers with battle scars and PTSD.
Buyers are finally in a place where there are choices. Buyers are finally getting to have more than five minutes to contemplate an over-asking offer on a home.
With the interest rate showing signs of stabilizing between 4.5 and 5.5 percent, buyers should be able to act confidently and be aggressive in the market. Don’t be afraid to make an offer on a home under the list price. Ask the seller to pay for the title policy or survey. Take your time looking at homes and don’t just settle on the first one you see.
It’s tough being a new home builder. While it can be very lucrative, there is still plenty of financial exposure and risk for new home builders. Everything in today’s real estate market has influenced the price of new homes — a labor shortage, supply chain issues, land values, COVID, the February 2021 winter storm, scarcity of materials — it’s amazing that many builders are still in business.
What builders have done is pass the cost to the buyer. For the most part, buyers had very little choice and signed contracts with escalator pricing clauses or paid the list or made above list prices the builders demanded. Buyers have been held hostage as production homes have taken well beyond the “typical” construction timeline because of various delays.
(This is not all builders, but certainly many out there, so don’t fill my inbox with rebuttals s’il vous plait.)
Many new home building companies have been extremely arrogant and aloof when dealing with buyers and their Realtors. With the attitude of “if we build it, they will buy,” some builders have given buyers and Realtors a bad taste in their mouths without concern.
Because builders were overflowing with business, some started reducing sales commissions to Realtors, not offering incentives to buyers, and offering very poor customer service and communication to their clients.
Now that interest rates are causing some contracted buyers to walk away from contracts and inventory homes aren’t flying off the shelves, builders who previously acted superior are offering bonuses, discounts, and buying down rates, allowing for contingent contracts on unfinished homes, and stepping up their customer communication.
Kudos to the building companies that never strayed from treating Realtors and buyers with respect and value. Your professionalism and behavior have certainly been noted and are remembered.
Price Improvement. Price Reduction. Pricing Adjustment. Perfected Pricing. Pretty Pretty Please Pricing.
The list of hilarious terms and phrases from Realtors to notify of a price drop is so amusing. I have to admit I am one of those real estate sales professionals that is constantly seeking new terminology to say, “Hey, we tried on a higher price but now the market has shifted so we are dropping the list price … so bring me a buyer and a contract!”
It is what it is. Realtors have worked diligently in the past 20 months with buyers, showing property after property, putting offers together, and trying to explain why an over-asking price offer was necessary if the buyer wanted to beat out all other competitors.
Now Realtors are working with sellers and explaining why their home shouldn’t be listed at a price that reflects the market from three months prior. Holding open houses on Saturdays and Sundays for the first time in many months is back in vogue. Explaining to their sellers that they still have a tremendous amount of equity in their home when they sell it as prices have increased by more than 50 percent since 2018.
Regardless of the market reaction nationwide, remember that this is Texas and our markets don’t necessarily reflect what is happening in other states. While the market is balancing, it is still very attractive to buyers and sellers and there are job opportunities in Texas that don’t exist in other parts of the country.
People are still moving to Texas in droves. Buyers need to buy and sellers need to sell.
What was your reaction to this new real estate market?