It's a new year, a time for resetting and setting goals. The other day, I was cleaning my house when a little voice of complaint started to creep into my head and I had to flip the switch as I realized, how lucky am I that I have a house to clean?! I am a big homebody and adore being home and really feel blessed to have a place to call my own. I believe in homeownership, but have always felt strongly that buyers should only buy a home if it makes financial sense, they are drawn to the property, and if they can see themselves in the home for a good amount of time. While no home is perfect, finding a home that is perfect for you should be your priority in this market that is much more balanced than in recent years.
Here are a few predictions for 2023, it will be fun to look back at this to see how accurate I am!
I predict that homes coming on the market this January and February that show well and are priced right will sell quickly and do well, as there is very limited inventory and there are buyers ready to get settled.
Over the past 18 years that I have sold real estate, about 1/3 of the homes I have sold have had drainage recommendations. Due to the recent heavy storms, many homeowners are experiencing water intrusion that they have not experienced before and buyers should not be surprised if drainage recommendations are called out in inspection reports. With climate change, homeowners who have drainage recommendations should budget for these repairs to protect their investment.
While the market is not what it was in 2021 or the first half of 2022, prices will likely hover around values from 2019 or 2020, but home values will likely be very property-specific, and the most sought after areas will be the least affected by the market shift. Buyers will likely not be very eager for homes that have expensive repair recommendations, odd layouts, or other challenges.
Sellers will likely get more offers with contingencies in place, especially appraisal contingencies. Buyers with loans will likely not want to cover the difference on an appraisal shortfall and I am already seeing more appraisal contingencies on contracts. Click here to read an old blog article I wrote that explains the appraisal contingency.
While, you may not always be able to write an offer with an inspection contingency and prevail, especially if there are multiple offers, several of my recent buyers have enjoyed having an inspection contingency period, something that was almost unheard of in the previous sellers market.
If you purchased a home in 2021 or 2022, you will likely not be able to sell without a loss, unless there is an unusual situation, such as you bought at a fair price and put work into the house that added value.
If you are looking to sell, it will be important to have comprehensive inspection reports and all of your disclosures thoroughly filled out for buyers to review. This will give you the best layer of protection, especially if a buyer has an inspection contingency. In our niche market a buyer will typically accept everything that is disclosed up front, all read and reviewed before they place their offer. If you have further inspections that have not been investigated, a buyer in this market will likely not be willing to accept the unknown and will want any further inspection recommendations investigated. Any new discovery will likely create a price negotiation, or in some cases, the buyer could cancel the transaction. No home is perfect, but transparency will be key for today's buyers.
If you are a seller and your agent is reviewing comparable sold data with you in an effort to provide you with a home value, you will often see a range of prices. Be realistic and accept that your home may sell within a range. It is not unusual for a seller to focus on one or two high sale priced properties in an area and ignore the average sold price. It’s important to remember that every home is different, as well as maintained and upgraded differently. A great agent will understand the differences and will be honest with you about your home's value.
For sellers, I know it is hard to swallow that your home will very likely sell for less than homes that sold in 2021 and the first half of 2022, but prices are still selling strong, as people love living in the East Bay!
Here’s to a great 2023 and don’t hesitate to reach out with any real estate-related questions or needs.
