Changes in Latitudes Attitudes
This story may sound slightly made up, but the 2022 real estate market across Northern Virginia was full of fast-paced drama which is still kind of hard to picture. The brakes weren’t just tapped… they were slammed!
Or to create a picture for you, we went from a wild Category 5 hurricane to a windy Tropical Storm.
Last January, the market was a daily horse race for every new listing in town. (For example, I showed 10 homes in a snowstorm, and most received a contract immediately!)
By November, a couple of appointments to show a listing on the first day would be considered a good turnout.
As I see it, 2023 is going to be the year when an agent’s real estate negotiation skills will be essential. Last year once a contract was ratified, everyone was set to close. This year, I expect speed bumps.
One tip, clear communication prior to writing up and submitting an offer will be a key to success.
How real estate offers adjusted last year
Home Buyers – early 2022
Anyone looking to buy a home in January 2022 was standing by, waiting anxiously for the next “ding” or alert on their Zillow or Redfin App.
Almost every buyer’s lifestyle was frantic…
Dinner plans were canceled. Sunday morning meetings at 9:00 a.m. to see before the dreaded Open-House… only to find that time already booked by two other agents!
Everyone expected firm offer deadlines on Sunday night or Tuesday by noon.
10 or more competing offers were the norm.
Negotiation was non-existent as buyers waived inspections, included “as-is” clauses, and the much-dreaded “Escalation Addendum”.
Escalation amounts of 15% and more over asking, and that still wasn’t winning the house!
Home Buyers – late 2022
The reality of mortgage rate increases had set in, ugh!
As new listings popped up, they were now carefully judged in the App of choice.
Suddenly, a common sentiment was, “it’s Overpriced”. The photos looked like it needs work. Wrong this, wrong that.
No competing offers. Or possibly one other offer.
Every offer included some negotiation.
Essentially all real estate offers changed radically in just a few months to include all types of contingencies, an offer price below the list price, and even include a seller subsidy toward the buyer’s closing costs.
Home Sellers – early 2022
Anyone looking to sell was also watching the market very carefully doing research on their preferred App like Zillow or Redfin.
Interestingly, most sellers were also looking to buy somewhere else or had already found a new place out of town. Most of them had experience under their belts, having been outbid once or twice in their search.
They also had the understanding that our market was just as crazy.
(This simultaneous experience was helpful because my clients were able to grasp how important it was to make small improvements to excite buyers)
Setting an asking price or “List Price” was also interesting because nearby listings were often selling in days over their list price. Sellers did not want to underprice their homes, but it was essential to be seen as a good value and then let the market determine the final sales price.
Amazingly, home sellers had little to negotiate because their demands were met or exceeded by competing offers willing to do whatever it took to beat another competing offer.
Home Sellers – late 2022
The fast increase in mortgage rates from March to November definitely sidelined many home buyers. (fortunately, Northern Virginia is still drawing people for professional jobs)
Getting a listing into shape and professionally presented wasn’t the only essential marketing element.
Asking price became the essential element and important to determine before launching a home live on the internet. Artificial Intelligence (AI) automatic pricing tools (you know, in Apps) suddenly could not track this very human factor and was recommending poor pricing recommendations for homes.
Average days on the market until a contract was accepted increased to more than 25 days which was a sharp contrast to earlier in the year.
Buyers were only considering clean, updated homes in their ideal locations such as for schools, work, or lifestyle.
Offers were below the asking price and included inspection and appraisal contingencies.
Negotiations weren’t just on basic terms, they were often over home inspection items.
What’s Out in 2023
- Free Seller Rent-backs
- Waiving Home Inspection Contingencies
- Waiving Appraisals
- Sight unseen offers
- Multiple Offers by Sunday
- Escalation Addendums
- Taking the house “as-is”
What’s In for 2023
- Buyers take two or three showings before making offers
- Relocating Buyers
- Negotiating the Sales Price
- Home Inspection Contingency
- Financing Contingencies
- A Full Appraisal
- Voiding the Contract
- Seller Rent Backs
- 30+ Days on the market
- 45 Day Closings
Moving forward…
With the 2023 Vienna real estate market just underway, I feel that our market is much more stable than in other areas around the country. Home buyers and sellers here may have to go through more to get the deal done, pricing will remain stable due to the supply of homes for sale remains low (too low).
If you are going to be involved in a real estate transaction this year, plan now how you will react to the many scenarios you’ll see in a negotiation. You can do this…
