KALAMAZOO, MI – Katelynd Dreger and boyfriend Craig Hotchkiss have spent the last month moving into their new home which they closed in May.
Unlike many homebuyers, who submitted more than 10 offers before getting one, the couple were fortunate enough to score on their third try, snagging a three-bedroom, two-bathroom home just downstairs. from Hotchkiss’s uncle’s road to Parchment.
What is the secret to their chance to land a house so quickly? Find one that wasn’t even listed.
Thanks to Hotchkiss’ uncle, who wandered around the neighborhood in the evenings and chatted with the vendors, the couple were able to make their way straight to the negotiating table before the house was listed.
“We contacted the original owners of the house and then our real estate agent came out and reviewed the house with us and basically walked us through the process,” Dreger said. “It was a fairly straightforward negotiation. We made our offer and we didn’t have too many back and forths.
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The months leading up to the purchase have been anything but easy for Dreger and Hotchkiss, who in February entered into a six-month lease for a one-bedroom apartment in Sturgis where they still pay rent.
While the couple achieved their goal of being in a new home by August when the lease was renewed, the ride got bumpy quickly, Dreger said.
“It was a roller coaster ride, much more than we expected,” she said. “The houses were moving so fast.
“When we started it was fun to start looking at the different houses, but it got a little difficult after a while. We would love a house and it would sell or we would see an ad and it would look great in the photos but not so much in person.
Overall, they only spent a little over a month buying their home, far less than the average buyer in today’s market, their real estate agent Colleen Lucas said, with the The Harrington team at Five Star Real Estate.
Lucas said it was not uncommon for customers to bid on at least 10 homes before receiving an offer. Often times, it takes so long, she said, because a buyer can be faced with two dozen deals on a home – which can go on the market on a Thursday and close deals on Sunday night or Monday. morning.
Dreger, a teacher at Plainwell, and Hotchkiss, a chemical technician at Hammond Roto-Finish, found themselves competing with this high number of potential buyers in their first round. They were bidding on a house in the Westwood neighborhood of Kalamazoo. Although they exceeded the list price of $ 15,000, they lost a cash bid just before the bids closed, Dreger said.
“We were told when we started that we wouldn’t go below $ 15,000 with the way the market is,” she said. “And being on a tight budget, with a maximum of $ 250,000, we couldn’t go that high with our deals. Luckily, we had a good real estate agent on our side.
According to Redfin, 52.2% of all homes in the Kalamazoo Market – which encompasses Kalamazoo County and parts of Allegan, Van Buren and Barry Counties – sold above the list price during the year. past year, an increase of 83.7% year over year. Only 7.8% of homes in the Kalamazoo market have seen their prices drop in the past year. The market was rated 81, or very hot, on the Redfin scale of 1 to 100.
Lucas said she tells all buyers that the sale price will be at least $ 15,000 higher than the sale price when it first goes to market. If it’s still in the market and isn’t on hold after 10 days, she said, the list price can be treated like the actual price. That still doesn’t guarantee you’ll get a home on the list or above, she said.
For Dreger and Hotchkiss, the second house they bid on was in Martin. The house matched that bill and had been on the market for a few weeks. While discussing to place a bid, they received a notice that the seller’s deadline for accepting bids was advanced. So, sensing the competition, they once again exceeded $ 15,000. And, again, they lost.
“It was intense,” Lucas said. “It’s about finding ways to be creative.
“I think multiple bids are standard at this point and really we’re happy when we’re only competing against 3 to 5 bids. It gets really intense when you go up against 15, 20, 30 offers.
Just a few years ago, Lucas said, it was common in negotiations to see a seller cover a buyer’s closing costs. Now the opposite is happening.
“As an agent you have to find the best way to compete,” she said. “Each buyer you work with is unique in their own unique situation and you’re trying to figure out the best way to maximize their market value because when you have 20 offers around the same price, it’s all about looking at terms. and different terms which each particular buyer presented and determined which one works best rather than the actual price.
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In addition to offering to cover the seller’s closing costs, this could mean agreeing to buy the home as is – regardless of the outcome of the inspection – or giving the seller a 45-day possession period after the inspection. closing the house to allow him to find their next home in a hotly contested market.
“From an industry perspective, we run a different set of rules of the game,” said Dan Jaqua, owner and president of Real Estate Agents Jaqua in Kalamazoo. “How you structure your closing schedule is now part of the negotiations. If you can offer the flexibility the seller exactly wants, whether it is closed in a week or in three months, it will improve your chances of accepting your offer.
“Right now the market is obviously favoring sellers which is a bit contradictory in terms because it only favors sellers who don’t have to buy anything else. I know I will sell my house quickly, but how long will it take me to find one? It’s about managing the other aspects of real estate that are not really real estate, but rather strategy.
Jaqua said that despite inventory numbers well below what they were, the stock is still there. It just doesn’t stay on the shelves for long, especially in the mid-income price range of $ 150,000 to $ 300,000, where most homes move in a single weekend.
As of June 27, there were 147 single family properties for sale in the Kalamazoo Market. Over the past month, 270 new homes have hit the market, a good indicator of how quickly they turn on and off.
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“Inventory is difficult to calculate because nothing is left on the shelf,” he said. “Imagine a grocery store that has nothing on its shelves but there are things to store in the reserve. So every time the stockist comes out to put something on the shelf, it gets picked up. This is how things are right now. The shelves are always full.
“It would be a lot different if things didn’t happen to the market. Things come onto the market, but they just don’t stay.
Still, Lucas points out, as of May 2020 there were around 600 homes listed in the Multiple Listing Service database and if you go back to when the recession hit in March 2008 there were 3,800 homes listed in Kalamazoo.
Even if things get colder, she said, no one should expect stocks to hit recessionary levels.
“I can see it coming back to 600-800 homes for sale eventually,” she said.
What people need to understand, Jaqua said, is that the Kalamazoo market has been hot for some time, it is only getting hot.
“We’ve had seven or eight years year after year saying it was the best year in real estate,” he said. “And I’m talking about volume, not units, and that includes the year of COVID where the volume grew 8%.
“We’ve gone from $ 225,000 at the end of 2020 to $ 236,000 after the first quarter to $ 244,000 right now. It just continues to escalate.
This current average selling mark is 103.5% of the average list price, according to MLS data.
How COVID has changed the market
Low inventory and the rapidly changing market have driven many people away, the two realtors agreed.
Many of these people have chosen to stay where they are, take advantage of record interest rates and refinance, but there are many other factors that have pushed existing buyers to find a new home in recent months, Lucas said. and Jaqua. .
While a homeowner may be able to easily refinance at a better rate and get cash, contractors are so supported and construction costs high, agents said this makes the improvements. faster and more expensive habitat. Additionally, many people feel they have outgrown their homes during the pandemic, as work and home schooling has led many to feel the need for something different, Lucas said. .
“The problem is, they’re not sure how to move on to the next house,” she said. “They know the house they’re in has a lot of equity and will sell out really quickly, but where are they going? It’s very scary as a seller knowing that if you build your house it will sell in 5-7 days.
“And finding a short term rental in Kalamazoo is incredibly difficult. One of our latest rentals managed by the Harrington team received 120 applications. In my mind, renting can actually be more difficult than buying a house for a certain price in Kalamazoo.
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