How NOT to set the listing price of your home.

151 Salt House Road, CorollaA lot of agents will do presentations on how they came up with a price for your home. It is a task that does require some skill. The challenge of course is getting the seller to agree to the pricing suggestions.

Many sellers come into the meeting with a general idea of what they want for the home, which is helpful. However, here are a few ideas on what NOT to do when you decide to sell your Outer Banks home in today’s market.

  • Tax Assessment Don’t confuse your county tax assessment with market value. Your tax assessment is for the purpose of assessing a tax amount to you for the purpose of revenue to the county. It doesn’t in any way suggest that’s what a buyer is willing to pay or a seller is willing to sell for. Most importantly the assessment on your home right now is 4 years old! On the Outer Banks they only re-assess every 8 years. Because it’s 4 years old, it also doesn’t take into consideration any improvements that have been done since the last assessment.
  • Old Appraisal Appraisals are only good for the day they are written. What? Yes, that’s correct. Considering that anything and everything could change tomorrow, an appraisal can only be valid for one day. If you have a year-old appraisal and want to base your price on some reflection of that, you might find yourself the highest bidder of your home. I mean I was a size 8 years ago, but that’s not exactly going in my dating profile for today!
  • Old Sales in the area – All agents have heard it… “Well, my neighbor sold last year for $30,000 more.” Markets never stay the same. It’s an ever-changing environment, which is why consulting with a good agent who studies home prices every day is the best way to get closest to current market value.
  • Recent Improvements – We’ve also all heard… “Well I have a new roof, HVAC and carpet. I want to ask $extra to cover those costs.” The fact that you’ve done these “maintenance” items is great. It shows you’ve taken care of the home. The problem is all houses need a roof, HVAC and carpet. In this market, that can make your home more saleable, not necessarily more valuable. Buyers expect the basic components to be in good condition already. What you can ask more for are upgrades. Changing vinyl to tile or carpet to hard wood, or laminate to granite are all upgrades.
  • Basing the price on your needs – We would all love to get the seller the most money possible. That’s part of our job. However, we can only sell the home for the true market value. Just because you NEED to get $50,000 at closing doesn’t mean it’s going to happen. You have to consider all the current factors in your marketplace and if those point to a lower price, you needing that money will not cause a buyer to pay it if the value isn’t there. You may need to adjust your plans based on what’s realistically going to come out of the sale of your home. These are hard conversations, but a good agent will not be afraid to spell out the truth.
  • Stuck on a previous market value –The last few years have been monumental. It was a fast- rising market and prices skyrocketed. Now we are in a more “normal” market. Prices aren’t rising or falling at a tangible rate just yet. Mostly because inventory is still too low. However, don’t get complacent. Markets ALWAYS cycle. What goes up, must come down. I predict this fall pricing will look differently than it does right now. So, pay attention to CURRENT trends and not what happened the last year or two.
  • Focus only on Price – So often I hear, “I don’t have to sell, I’ll just wait if I have to sell at that price.” Selling a home is based on a LOT of decisions, not just the price for it. No one wakes up and turns to their spouse and says “Honey, the house is worth $X, we have to sell it.” Selling is based upon life changes, new needs, maintenance costs, jobs, marriages and so many more things that are related to the way we live our lives. It’s sometimes concerning when I see a seller refuse to sell based solely on the price. That means they are putting that dollar value above the benefits selling the home can bring to the family. Don’t let the emotional response to the price create a “wish I would have” moment.

Now that we’ve covered what NOT to do, if you need help pricing your Outer Banks home for a prime spot in our market today, certainly let me know how I can assist you!

The “Raw Truth” about the OBX market right now.

It’s no secret the real estate market is in very bad shape right now.  And in an effort to be as up-front as possible about the pros and cons, I wanted to create this quick list of the main things to consider before buying or selling.

One of the biggest questions I get as an agent is around timing.  When is the right time to buy or to sell?  Truthfully, there is not a one-size-fits-all answer to this.  The best time is when you want to.  Rarely do we have clients who HAVE to buy or sell out of some distress.  That’s just not the norm.  So, does it make sense for YOU to buy or sell right now?  Let’s look at the raw truth.

  1. Outer Banks homes have the ability to generate quite a nice rental income. If you want to insure your long-term capability to own the home, only look at homes with income that is enough to cover the mortgage.  If it’s not going to cover at least that part, it may not be the right house for you.
  2. OBX home purchases are primarily a lifestyle choice. It’s not the norm to make bank on rental income, so only buy a home you know you will get a lot of personal use from.  If it’s not really ideal for your family, you won’t use it.  That time spent is priceless.  Be sure it fits your future family, too.
  3. With banks failing as what seems to be a regular occurrence now, real estate is an actual tangible asset. While the prices do fluctuate, it will never go to zero.  The inflationary dollar is in real trouble.  Why not park some cash in real estate, especially with passive income and personal use on the table?
  4. However, real estate appreciation or value is NOT capable of instant liquidity. Unless you consider 30 days instant.  Pulling liquidity out of real estate takes some financial investment and, most importantly, time.  If you need liquid cash fast, this is not the right investment.
  5. MAINTENANCE IS MANDATORY. Let me say that again.    Do not become one of those lax owners who collects the money and does nothing to the house for 20 years.  It will only cost more later.  The environment here is harsh.  Annual maintenance to keep the home in top condition is expensive.  Be prepared for that, or just buy raw land instead.
  6. While we benefit from low taxes here, insurance is most definitely on the rise! It may soon be unaffordable for many.  And, there is talk of no longer offering coverage for natural disasters.  I can’t imagine they get away with that, but be aware it’s being talked about. To be properly insured could be pushing $15,000 for many homes these days.  It’s nothing to take lightly.  Make sure you aren’t currently under-insured.  Construction costs for a new build START at $300/sq.ft. now!  (I hope you were sitting when you read that)
  7. Interest rates aren’t forever; you can refinance! Granted, you will need equity in the home to do that, so be aware it does come with some risk if that is your plan.  You will need to refinance before the market price eats up your 20% down payment, or it will require more cash to make it happen.
  8. As a Long-term investment plan, real estate is actually very low risk – high reward. Even if someone bought in the last boom of 2005, just 16 years later, even they would have made a handsome profit.  Not to mention 15 or 20 years of someone else paying your mortgage…all that equity for you to capitalize on at the end.

If you would like to discuss your specific circumstances and find out the best timing to either buy or sell, just contact me and we will go through everything you need to know!

August Market Update 2023

August on the Outer Banks

We are closely watching the main stats on supply (up 33% since January) and demand (down 44% since January).  Part of that is watching more specific pockets of activity to glean a closer insight into future trends.  One of those trends I’ve noticed in my near 30 year career is that of high-end home sales.

Take a look at the numbers for Duck and Corolla.

Homes sold $2M and over:

2019 –              6

2020 –              26

2021 –              64

2022 –              51

2023 –              17 YTD  (Likely on track for 27 total)

    • Even if we end up at 27 sold, that will be a decline of 47% year over year.
    • Number of price reductions to get homes sold is going up; 60% of properties sold are under list price, compared to 51% last year.
    • Median days on market for the high-end sales has gone from 21 days to 93 days year over year.
    • There are currently 30 homes for sale in Duck and Corolla $2M and over. With basically 2.4 buyers a month this is over a year worth of inventory.

With interest rates rising, insurance costs rising, rents stabilizing to pre-pandemic times, it’s really clear that a shift in pricing has to take place.  The timing of this is what’s left to be seen.  This strange anomaly of still very low inventory (although is starting to slowly climb) is keeping us stuck in limbo.

If you’re thinking about selling, let’s talk about what your home’s value may look like in this market.

Beach Realty and Construction’s Agent of the Year for 2022

Beach Realty and Construction’s Agent of the year for 2022

Congratulations to Beach Realty and Construction’s Agent of the year for 2022, Ilona Matteson! This is Ilona’s third year in a row earning the title of Agent of the Year! In the year 2012 Ilona first achieved this award and has gone on to earn the title 5 more times! We are proud to have Ilona as a leader, trainer, and valued agent on our team.

Ilona Matteson brings a wealth of experience and knowledge to the sales team at Beach Realty & Construction. As a former sales manager for Beach Realty and a former coach for the nationally acclaimed Mike Ferry Organization, Ilona knows the real estate business inside and out. In 2004, she was selected for the annual 30 Under 30 feature for Realtor Magazine and was also a licensed instructor employed by the North Carolina Academy of Real Estate. Ilona has a thorough understanding of market conditions and works diligently for her clients.

Be sure to call Ilona Matteson for all your Real Estate Needs!

 

2023 Outer Banks Market Predictions

After a few years of a WILD RIDE, things are finally starting to stabilize here at the beach.  A normal market (no real swing in value up or down) is defined by an inventory of 4 to 6 months.  We are currently just under a 5-month inventory, putting us smack in the middle of that range.  With this as our starting point, where might we be headed?

Pricing – Currently, pricing still feels on the high end.  The 15 buyer deep multiple offer scenarios are long gone, but we haven’t quite seen a sharp change in pricing just yet.  However, would you be surprised to know that even in the thickest part of the frenzy, still, 50% of all properties sold were for LESS than the asking price?  Below is a comparison of what the market did in January of 2022, fast forward to November, and then the average for the entire year of 2022.

2022 Closings          Jan %                     Nov %                        YTD%

Full Price                     23.86%                        22.05%                        23.90%

Over List Price             21.05%                        15.90%                        25.54%

Under List Price          55.09%                        62.05%                        50.55%

PREDICTION #1 – 2023 by year’s end we will move to 80% of homes will sell for less than list price.

Activity –  As I mentioned in the email, we are already seeing a 52% drop in the number of properties under contract as well as 50% drop in the number of sold from this same time last year.  Under contract percentage of inventory hit a peak of 48% and is now down to 26%.  So activity has SHARPLY moved downward.  An inventory bump of only 10% would push us over a 6 month supply and that is when we will likely see a major effect in pricing.

PREDICTION #2 – By June/July, the inventory will peak to a 7 or 8 month supply and pricing will start to be greatly affected.

Rentals – With the airline industry crippled in personnel shortages, among other things, including cost, our rental season will continue to be very strong this year.  People will prefer driving destinations over flights.  Our own rental numbers continue to show a steady growth patter for 2023.

PREDICTION #3 – If you do desire to buy or sell, rental income will remain a good investment strategy.

Interest Rates – We are seeing rates right around 7% for conforming, unless you choose the ARM option for either 7 or 10 years depending on the lender.  Banks right now are showing more favorable terms because they are able to designate more money to shelf these loans long term.  We know the FED wants to slow the interest rate increases, but with the recent $1.7 Trillion bill passed, it’s unclear how they will do that.

PREDICTION#4 – It looks like rates will hover in the 6.5% to 7.5% range.  If you want to take a chance on an ARM, that can get you lower.

Buyers – It’s no secret that the market is mid-cycle.  All the economic factors are present.  So if you want to sell your home in 2023, before things cycle back down, it’s important to understand the current buyer mindset.  Fewer buyers are in the marketplace, and as inventory goes up, it will start to push prices down.  However, I still believe real estate to be one of the best investments to make in an uncertain economy.  Why?  The value of the dollar is ever decreasing.  Real Estate is a tangible asset.  It has value beyond the “sales price”.  It can generate passive income, be used personally, create some tax benefits, etc.  I’m not worried about being able to find a buyer for your home.  What I do know is that financial experts will advise buyers to pay less in anticipation of a pricing adjustment.  This only means you have to truly strategize all aspects of the sale, not just price.

PREDICTION#5 – Condition, price, seller concessions for buying down points, lower due diligence offerings, staging the home, will become even more valuable negotiation points than we have seen in the last 2 years.

I’m personally excited for the market in 2023.  This is when truly skilled agents get to shine!  Negotiation skills and strategy will be more important, and so will having a professional on your side. If you have any questions about buying or selling, reach out!

IS YOUR HOUSE READY TO GO ON THE MARKET? CHECK OUT THESE 8 TIPS!

It’s no secret the real estate market on the Outer Banks is shifting. Even as we move into a seller’s market, keep in mind a majority of our home sales are secondary homes. This means more than 50% of our home buyers will spend up to 2 years searching for the right home. They can do that because they aren’t physically moving into the home.

Being a discretionary purchase, they have the time to wait for the right house. That means even if you have the upper hand in terms of lower inventory and potentially rising prices, buyers still want what they want. Your home can still sit on the market for a prolonged period of time if it’s not set up to sell in today’s real estate market.

We’ve put together a checklist of readiness to ensure your home can hit the market and sell for the best price in the fastest time frame. Consider the following market statistics:

  • In 2019 there were 1,842 single-family homes sold
  • Currently, there are only 1,079 single-family homes listed for sale (2/20/2020)
  • Almost 60% (58%) of all properties sell in the first 90 days
  • Median days on market is 69
  • They are selling within 4% to 5% of asking price

If closed sales for January and current Under Contract numbers are at record highs, we could easily see 2020 hit the 2,000 single-family homes sold mark. That means we barely have half the homes on the market right now that could potentially sell this year.

The following checklist is designed to get you the most for your home in the current market:

1. HAVE A HOME INSPECTION

Let’s face it, the last time we had this kind of market shift in 2000, a home built in 1985 was only 15 years old. Today, that home is now 35 years old. In the extreme weather environment, we have on the OBX, a lot can happen in 35 years. If your home is more than 10 years old, you need a pre-listing home inspection. The number one cause for deals to fall apart is a home inspection revealing more than the eye can see. Buyers get nervous and walk. When that happens, the entire world knows your home sold, then un-sold, and everyone wants to know why. The items discovered will most likely become a material fact and have to be disclosed to future buyers. If an inspection is done beforehand, major items can be addressed and taken care of. End of story. There is no reason to list your home blindly and set yourself up to negotiate the “unknown” 2 to 3 weeks into a sale.

2. MAINTENANCE ITEMS

Even if a home inspection reveals no issues, sometimes systems will be at the end of their life expectancy. Buyers today do not want to walk into automatic maintenance without expecting a deep discount. If your 20-year roof is on year 18, it is wise to replace it. There’s no guarantee you can add that cost to the top of your asking price, but what it can do is sway a buyer towards your property versus another. The number one concern for buyers today is condition. Your home does not become more valuable because the systems work. However, it does immediately become more saleable.

3. POWERWASH/CLEAN

This should be a no-brainer, yet all the time I show or preview homes that look like they’ve been abandoned. Everyone likes things that look nice. Take an honest look at your home’s exterior and interior. One of the easiest spaces to turn off a buyer is the carport and outside shower area. Buyers say all the time, you can tell how well the owners have cared for this home by how those areas look. Clean up the leaves, sand, junk that can accumulate. Power wash the gunk off the decks and siding. Get the interior a nice spring clean. First impressions don’t generally get a do-over.

4. PREPARE THE ENTRYWAY

What will buyers see as they approach your home, climb the stairs and enter the front door? Is it inviting? Is the door rotted or rusted? Does the key work easily? Are there spider webs or overgrown plants and weeds? This will set the tone for the entire showing. Sometimes buyers will change their minds about seeing a home altogether if the entry isn’t pleasant. Be mindful of the best way to enter your home. If your electronic keypad is on a door that isn’t the best entry, insist on giving your agent a key to the best entrance and have buyers go in that way. I recently went into preview a $750,000 home that was quite lovely. The entrance had imported tile, great artwork and felt very welcoming. The agent gave me a keycode that opened a door to an empty two-car, cold, garage. This is not the first impression you want.

5. YARDWORK

No matter what time of year you list your home for sale, take a good look at the landscape of your yard, which is the main aspect of curb appeal. Having branches scraping the side of your car as you pull into the driveway is not a good look! Do what you can to clean it up for whatever is appropriate for the season.

6. DECLUTTER OR STAGING

Whether you live in the home or it’s your vacation home, have a professional eye look and give advice on how to stage it to sell. Most people need to see space, rather than stuff, in order to envision themselves in your home. Less is more when it comes to wall hangings and nick-knacks. Updating bedspreads and shower curtains is an easy way to give the home a fresh look. If the home is being sold furnished, some fresh, beachy furnishings can make all the difference.

7. UPGRADES

With the new HGTV culture, buyers expect homes to be already updated. This type of preparation can take several months to do. These are the things you want to plan 6 months to a year before you list your home for sale. Depending on whether you live there or rent, everyone can also get a chance to enjoy the upgrades as well. Before spending any money, decide what your budget is and have an agent come over to advise the best use of that money. Some updates will prove a better return than others. We talk to hundreds of buyers a year, so we have a clear idea of what will get you the most for your money. Be prepared though, construction costs have doubled in the last 10 years. You’ll want to really follow a plan to stay on budget and get the most out of it.

8. PROPERTY MANAGEMENT DETAILS

With the growing popularity of VRBO and Air BnB type of rental arrangements, there are some real challenges when selling. Those types of reservations, when done solely through the property owner, are automatically not transferrable when selling. If a buyer is relying on the income of your home to make the purchase, you could run into some real issues at the closing table. Even if you are renting through a traditional property management company, there can be cancellation fees you incur if the new buyer doesn’t stick with your rental company. It’s becoming increasingly more important to employ the proper timing strategy to sell, depending on the source of your weekly guests. Talking to an agent ahead of listing about how the transfer works will help avoid any major stresses once the home is under contract.

WHY DO YOU NEED A PROFESSIONAL REAL ESTATE AGENT, EVEN IN THIS MARKET?

Ilona Matteson, Beach Realty

Getting an offer on your home in an active market seems quite easy, and in most cases it is.  What do you need an agent for then?  Well, finding the buyer is just the first of dozens of steps in getting your home sold.

The question becomes, do you want to ensure you are getting maximum VALUE as well as maximum CONVENIENCE when selling?  It’s actually a pretty pain staking process to go through the entire 45 to 60 day process and requires many, many hours of time.

Many sellers think they can get an offer and then “let the attorney handle it”.  Yes, your attorney can manage the CLOSING.  That simply entails preparing your deed and handling the transfer of money AT THE END OF THE TRANSACTION.

Here’s what it doesn’t include:

  • Pre-Qualifying the buyer/agent/offer to make sure it’s a solid deal
  • Negotiating for the highest dollar
  • Choosing the best offer, in the case of multiple offers (it’s not always about the highest price)
  • Negotiating the home inspection, including finding contractors to give estimates, and meeting them at the home
  • Pest Inspection, Septic Inspection, Pool/Hot Tub, HVAC – knowing vendors and meeting them at the home
  • Prepping the appraiser or answering comparable questions – attorneys don’t have access to MLS, nor have been in the latest homes sold
  • Staying on top of the buyer’s loan process
  • Knowing which lenders and other vendors perform on time
  • Working with the rental company to transition buyer
  • Handling the dozens of calls from buyer/buyer’s agent throughout the process

Bottom line, we are experiencing an extreme number of homes selling per month.  All requiring an attorney to manage the closing.  The attorney is not available to answer calls throughout the day to deal with the day to day situations that come up during your closing process.  In addition to that, if they were available, they would be charging you per hour for that time.  Most attorneys charge around $200/hour.  On average an agent will spend 30 to 40 hours working on your transaction.

Even if you offer a commission to a Buyer’s Agent and think they can assist with these tasks, that’s true.  However, the Buyer’s Agent works for the buyer.  You are now essentially paying the buyer’s agent to work AGAINST you, without your own representation.

In the end, the best way to maximize VALUE and CONVENIENCE is to have a professional agent manage the ever challenging task of getting your home sale to a successful closing.

February Market Report

Good Morning!

While the outside temperature may be at freezing right now for the Outer Banks, our market is smoking hot!  Well at least when it comes to activity.

Chew on this – From Nags Head to Corolla, there were 98 homes that went under contract in January.  Of those, 34 have been on the market for 60 days or less and 24 were on the market for 30 days or less.

That means 24 homes that JUST came on the market in December or January and are already under contract.  Another great note, 6 of those 98 are deals I put together!  I’ve been very busy so far this year and am working hard to keep it going.

Even though the data reports that closed transactions for January shows a 13% drop from January of 2014, that is really an indication of activity from November and December.  It will be very interesting to see the difference in closed transactions for this February over last year.

So that covers activity…I know, you’re thinking about value and price now.  Take a look at the chart below.  While activity has had its ups and downs, price has really flat lined.  That’s actually expected after a market crash as devastating as we had.

Year

Units Sold Percentage Change Median Price Percent Change Active Listings Median DOM Months Supply

2011

1,333

$284,500

2012

1,596 20% $285,000 0% 1726 226

12.98

2013

1,574 -1% $273,500 -4% 1714 222

13.07

2014 1,604

2%

$280,000 2% 1733

213

12.97

Let me know how I can help.

If you’re considering buying and found a house you love, take action before it sells!
If you’re thinking about selling, there’s NO reason to wait.  Buyers are ready! Also keep in mind that we are a resort market.  Most buyers and sellers don’t HAVE to buy or sell.  It’s a discretionary purchase, so it’s normal for our market to take longer to recover.