REAL ESTATE TIPS: In 2021, think local and don’t try to set market price trends
2020 is officially over. I think that makes many people very happy. We are enough into 2021 that if any of you thought that the calendar changing to the new year would make things officially back to normal, you can see that did not happen. It is safe to say that nobody had any idea what 2020 would look like and we have no idea what 2021 will hold. But really, we have no idea what any year will hold.
In any given year you don’t always know who will get sick, get married, get divorced, have a baby, have twins, or get a new job. I haven’t even touched world events like the stock market and viruses.
But we can make predictions. They are actually kind of fun. Like predicting throughout my childhood that I would have a ton of kids, half boys and half girls.
Real estate predictions are sometimes accurate and sometimes not even close. So let’s look at two 2020 real estate predictions almost completely opposite of each other.
* The real estate market was going to tank. It never did. In fact, it never slowed down in our area and prices kept going up and up. The key words throughout are “in our area.” I can think of two states that shut down real estate at one point as it was not considered essential. Many agents were collecting unemployment. I have a client whose brother-in-law is in commercial real estate in another state. He went from a booming business to pretty much a nonexistent business. The doom and gloom was everywhere in the spring.
Every real estate column I read was so negative about the market that I finally had to send a group email to my agents. I reminded them that this is national news, not local, so don’t get worried as we were busier than ever. That has not changed.
Lots of different things about real estate markets are different in different areas. Prices, type of homes, etc. How many log cabins do you see in downtown Nashville and how many high rise buildings do you see in rural Montana? So if you are wondering what your market is really like, ask local experts.
* The market is hot so I want to sell and set my own price. OK. Stop and breathe friend. Yes the market is hot. Yes prices are increasing like crazy. Yes in most cases your house is worth more than it was a year ago. But here’s the thing. You don’t set the price for your house, the market does. And there is this one word detail that is very important. Appraisal.
One of the things many local agents in our area have been seeing is sellers who want to set their own price. They have a price in mind because the market is so hot. So let’s make up a pretend house.
*A year ago Mr. Seller’s house on Pretend Street would have sold for $100K. He knows that the value has gone up so he asks his Realtor to do comps. The realtor does and tells him that he is a lucky man because that house is now worth $120K and he has not done a single improvement in the 12 months that he has owned the home.
The seller thinks that it should be worth more. He wants to list it for $180K. The problem is that he doesn’t understand the situation. His agent gave him a hot market price of a $20K price increase in one year. Does that make sense? We don’t determine the value of our house. The market does and the appraisal confirms that price the market wants to pay for it.
Lots of things were crazy in 2020. Some things were good and some things were not so good. I don’t know that my boys appreciated all of the extra family bonding time that we had in the spring but I did!
For 2021 in terms of real estate, I just have two pieces of advice:
1. Think local. If you want to know what is going on in your local area, ask a local person, don’t find national articles online.
2. Don’t try to be a market price trend setter. The people who do that might miss out on a great seller’s market, like Mr. Seller from Pretend Street. Because sellers’ market or not, there wasn’t a buyer out there who was going to pay his price for the house.
So 2021, we are ready for you. We are ready for the excitement and hidden joys that any year can bring, no matter what crazy stuff is happening. I hope that your 2021 is great and healthy and fun!
Esta Ryder, Broker/Owner
Ryder Realty, LLC