Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
upstate of South Carolina I'm your host
Stan McCune as always realtor here in the
greater Greenville area and you can find
all of my contact information as always
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if you have a moment we're going
to be talking about today and I just
had a little New Jersey accent moment
there for a second we're going to be
talking we're going to be talking
talking today about the the spring real
estate season that we're entering into
and this is what happens every year
this time of year we have things kind of
take off during the Spring that is a
normal cyclical part of the market
and and it generally works like this
there is a slow buildup January February
March and then usually things kind of
get nutty in April and then really nutty
in May and then that continues in June
and then we see a little dip in July as
people go on vacation all that kind of
stuff and then a little push little
end of season push in August and then
things start to Trail off as the rest of
the year goes on until we go back to
January and then it starts all over
again that is the normal cycle of the
real estate market at least here in
Greenville I imagine it's probably
Nationwide for the most part as well
but last year it it was interesting
because we thought things were were
really crazy in the the first quarter of
the year and they were I mean to be
completely honest the first quarter of
last year was really crazy but when
April really towards the end of April
and then into may we realized we were in
something that was unlike any other
Market that we had ever experienced that
was when we started to see some of these
insane price increases year on year
that's when we started to see month
supply of inventory drop to levels
that we didn't even think were possible
that was when we for the first time
started to see the percentage of
contract price or the percentage of
sales price to list price start to get
to 100% or higher when traditionally it
had always been you know people always
sold their home for less than it was
listed for starting in April last year
that was when that Trend happened of
it not being uncommon for sellers to get
on average and and again there's always
been times where sellers have gotten
more than what the home is listed for
but in April last year was when the
average became that sellers got at or
above what they had home listed for so
things went really crazy last April
but there are so many different things
that make the market right now just
unpredictable we've talked about this of
course but we still have all of the
the things baked in that would assume
that this would be a normal spring
season but also not a normal spring
season so so we still have the the very
low Supply right we've talked about this
a lot still very low Supply causing
prices to go up dramatically but there
are some indicators that Supply may
increase a bit in upcoming months I'm
not going to get into the Weeds on this
the building permits are up there are
some indicators that some supply chain
related things are improving although
some are worsening so that may all
balance itself out but anyway long
story short is there may be a little bit
of an increase in Supply I don't think
it's going to turn the dial that much
but we have to see we just don't know
obviously we've talked about mortgage
rates have gone up at a crazy
unprecedented rate or at least
unprecedented in recent times and
they're still quite low historically
but when they when they shoot up so
quickly that obviously causes a System
Shock to the market now we haven't
seen that System Shock yet but will we
that's a question and that's a
question that I have and that we'll
discuss here in a moment
at the end of the day we have a lot
of stuff being stirred around in a
cauldron and we don't exactly know what
soup is going to come out of it what
real estate soup is going to come out of
it as we enter the busy spring real
estate spring and summer real estate
season and here's another little
interesting tidbit so I read an article
yesterday on Bloomberg that was talking
about the the mortgage increases that
we've that we've talked about a bit
the the the mortgage interest rate
increases and it was pointing out
that this will cause a little bit of a
Slowdown in buyer
demand in theory but where it's having
the most impact is in those already very
expensive areas like San Diego for
instance like San Francisco like New
York City
those are the areas that are being
disproportionately impacted by the
interest rates going up and the the
person that wrote this article kind of
alluded to that the mortgage rates going
up will push more people out of those
areas into the cheaper areas like the
boy the Idaho of the world well
Greenville as we all know is one of
those markets that people have been
pushed to as they've been pushed out of
these more expensive areas or maybe not
even pushed out of these expensive areas
as they just want to move out of the you
know these areas that tax everyone that
have been very restrictive with covid
whatever the case may be people have
their own motivations I've heard them
all but the bottom line is we have a lot
of people moving to Greenville from
these more expensive areas and what's
happening on the national level with the
FED trying to curb inflation which is
then in turn driving up mortgage rates
could end end up actually furthering
that and pushing more people out of
those expensive markets and into markets
like Greenville so again that's
something that we'll have to continue
to track so all of that to say there is
all sorts of Uncertain uncertainty we
don't know exactly what's going to
happen but I think we can make a few
reasonable predictions I have seven
predictions here and again these
predictions are Greenville specific if
you're listening to this from another
Market I wouldn't necessarily say
that that these things would apply
perhaps some of them do but anytime I
talk about real estate on here because
I'm not looking at it from a national
perspective it is coming through a
Greenville lens even when it's a broader
topic like this all right so what's
my first prediction I think that we will
see an increase in contracts falling
through due to mortgage rates increasing
so quickly a lot of people will get
preapproved and then particularly in
this market after
well the amount of time that it takes
to actually get a house under contract
it it might take weeks it might take
months and during that time if they have
not gone back to the lender or if their
agent has not gone back to the lender
and been like hey you know we originally
set the top price point the top price
for our budget at
300,000 but that was when interest rates
were 3 and a half% now that they're at
five 5 a 12% can we still afford
300,000 that's a very important question
and for those that just have that that
two-month-old preapproval letter and
they they send that you know that's
usually a requirement when you send an
offer you've got to send your
pre-approval letter in they send that in
if the listing agent doesn't then vet
out that preapproval letter to double
check that the buyer can actually
perform can actually purchase the house
now that rates have gone up it's
likely that we will see contracts
falling through because of that because
I I can tell you right now a lot of
listing agents they don't double check
those letters they're they're not
calling the lenders to check on things
they they just see it they just assume
it's good and then move on for me
I double check those when I'm the
listing agent I want to make sure that
the buyer is good to go that there's not
been particularly now in this
environment that there's not been any
major changes that would cause them to
not be able to buy the house and as a
buyer agent I do something similar in
this type of an environment had a client
recently that wanted to put an offer on
a house and I was just like okay I need
to check with the lender to make sure
you can still afford this because it was
at the top price the top price point
for their budget and and that and
they got pre-approved when mortgage
rates were a lot lower and so I went out
of my way because I don't want them to
get under contract and have that fall
through that's heartbreaking for
everyone nobody wins in that situation
it's a lot of work on top of of all
the Heartbreak and so I went out of
my way to make sure that they were
pre-approved at that price point with
the current environment for mortgage
rates so those that haven't gone
through all of that there's a very good
likelihood that they will start to see
contracts fall through because of that
and and I think honestly we may have
already seen this I I have seen quite a
few fall through and you know the
listing agent they always say this
but they say you know it fell through no
fault of of the seller they always say
that so it's hard to to be sure that
that's accurate but most of the time
when that happens it's because of the
buyer financing I think that that
will continue my second prediction I
well I should say I think it will
continue and increase I I think we might
see a major increase of contracts
falling through here in the spring so
that's something to monitor number
two lots of homes I believe are going
to be listed way
overpriced and what we're going to
see is that price decreases which we
really haven't seen much the past year
we haven't seen a lot of times where a
home has been listed and then has had to
reduce its price but I think we will
see price reductions really increase
during the Spring season because people
are going to be listing their homes
thinking okay it's a hot Market I know
this home normally would only be worth
350 but let's just list it for
400 and what's going to happen is
they're going to overplay their hand
there's going to be a lot of people that
overplay their hand and that end up
having to decrease and and reduce the
price on their home and and then what's
going to happen is you're going to have
some people you know your friends are
going to tell you oh the market is
shifting you're going to hear some
realtor say oh the market is Shifting
because we had to reduce the price on
this home and it's like that that could
be true if there's more to it than just
this Dynamic that I'm explaining but
when someone overprices their home and
then has to reduce the price that
doesn't say anything about the market
that just says that you had a poor
marketing strategy for your home you
should never overprice your home in
this market you can get away with it a
little bit more than in other markets
but it's still not a good idea
number three I think we're going
to see and and we're already seeing this
but I think we're going to see even more
of people saying that they're selling a
home as is and that will be because of
people really it's it's a lot of people
just not wanting to have to to mess
around with repairs they want to just
get under contract and just okay it's
smooth sailing we're focusing on moving
or or or whatever the case may be so
that they don't have to focus on getting
contractors out there and doing all
sorts of repairs etc etc I think
we're going to we're we're already
seeing that I think we're going to see
that increase more and more people
wanting to sell their home as is because
they can and this is also has also
been a big Trend recently in the past if
you inherited a home for instance or if
you were an elderly person and you
were trying to to move out of your home
whatever the case may
a home that was livable but needed a lot
of cosmetic work wouldn't be listed in
that condition right the elderly person
doing that they might have their family
or their Church come over and try to
help them spruce up the house get it
ready to sell whatever the case may be
those that inherited a home from
deceased parents they would flip the
house and and then put it on the
market that Dynamic has really changed
and I think that will continue to change
we're seeing a ton of houses and I think
this will continue homes that are being
sold as is that are really cosmetic
fixer uppers but they are livable and so
they're technically able to get
financing but man they've got that old
Shaggy carpet from 50 years ago and
baseboard heat and you know all these
quirky you know quirky things some
you know damage to the cabinets all
these different things you know Hardwood
Woods are scratched up but
technically it does qualify for
financing because it is livable and so
people are are listing these and then
just saying as as is you can do it
whatever do to it whatever you want to
do to it but we're not replacing carpet
and buffing you know refinishing the
floors and replacing the the Cabinetry
you got to do that yourself I think
that that Trend which has already
started I think will and will pick up
number four I think that we'll see
flippers and small Builders increasingly
taking risk on cheap homes in
traditionally undesirable locations what
I mean by that is you know because of
how housing affordability has has kind
of Tanked in the Greenville area at
least by local metrics now we're
seeing the average or the median home
price be around the $300,000 price point
well that's that's a big increase
from when it was in the low 200s not
that long ago so what that means is that
now there's an opportunity some of some
of the best opportunities for people
flipping homes and you know building
cheap new construction is to find those
transitional areas those places that
people traditionally would have avoided
and they
can have a nice home flip a house build
you know a a small but nice cheap H
cheap home and whereas in the past
people would have been like wow that's a
really nice home but I ain't moving
there because I don't like that area now
they just don't have any other options
and so and flippers don't have a
whole lot of options in terms of of
what they can purchase there's not a ton
of opportunities out there and so this
is kind of a marriage between the
flippers who these are going to be the
only homes that they're going to be able
to buy are in areas that
traditionally you wouldn't flip homes in
and then the buyers they're going to be
forced because there's just nothing else
available that they can that they can
get they're going to be forced to have
to to purchase a home like that or to
try to get into a bidding war for for
one of these other homes that need a lot
of work and so I think that that's
the trend I that I have not really
seen a whole lot I've seen a little
bit but I think that that is has the
potential to really take off this year
number five I think we're going to
see a a big increase in firsttime home
buyers that have been looking for the
few months just drop out and I think
that that's going to be have a lot to
do with the the mortgage rates that
we've talked about I think that as a
lot more homes come on the market but a
lot more buyers also enter the market
the the new buyers entering the market
are going to be energetic right they're
going to be excited when you first start
your home search you're excited you're
pumped you're ready let's make some
offers and and then you're you've got
this influx of new listings coming on
the market because it's the busy season
right so here's what happens you've got
the people that have been looking for
like two three four months they're
already tired right they've already got
buer fatigue they're they're ready to
drop out and now you've got this
influx of listings so it's like okay
well we have some some potential here
and so now whereas in the past they were
maybe only looking at a handful of homes
per week now they have an opportunity to
look at a bunch of homes and so they
they start it gives them a little bit
you know a little bit of excitement a
little bit of that you know okay maybe
we can actually do something here and
then they start looking at those homes
and putting in all that time and energy
taking off work or or doing it after
work or whatever the case may be and
then submitting offers and then
finding that they're going up against
this even more energetic group that just
entered the market and that is really
aggressive because they're scared
about mortgage rates going up they've
heard they've been tracking this very
closely they've heard what's happening
and they want to get a house under
contract right away and then those
buyers that have been looking for
months and months they just get
completely Fed Up and exhausted and they
drop out I think that that is going
to happen and and it's sad when that
happens because that's again everyone
loses in that situation me as a
realtor you know if I have clients that
I've shown a bunch of homes to over the
course of a really long period of time
and then they drop out that's just a
sunk cost for me and it's a sunk cost
for the for the buyer as well so
again nobody wins in that situation but
unfortunately I think that we're going
to see that really happen here in the
spring season number six I think
we're going to see an increase in quote
unquote second waves for homes that
aren't as nice as the other homes coming
on the market and as a result don't sell
in the first few days here's what I mean
by second waves so think about it
from a buyer
perspective let's say that you're
targeting a certain area let's say that
you're targeting East Side Greenville
and between Wednesday and Friday five
homes that Loosely fit your criteria
come on the market in East Side
Greenville you're going to to look at
that and be like okay all five of these
have potential but here's the one I want
the most here's kind of the next up and
so forth and so on right well guess
what everyone else looking at these
homes is probably going to be thinking
about them in similar ways at the end of
the day they're probably all going to be
like okay this home is clearly the
nicest and clearly the best value and
then this this home is next and maybe
there there's some differing opinions on
on what's in third or fourth or fifth
place but probably most people are
going to have consensus on the nicest
and the second nicest home so guess what
everyone is going to be making offers on
those homes and and kind of not paying
attention to the others okay so how does
that play out traditionally how that
traditionally plays out is that once
those top two homes go under contract
then everyone starts to focus on homes
that were in third fourth and fifth
place and so what the result is is
there's a second wave of showings and
sometimes I have run into this in these
situations in the past after home's been
on the market for a week or two there
can be multiple offers that happen just
just randomly because everyone after the
inventory situation resolved itself
the the people in other words everything
else went under contract the people the
buyers that were left now all focus on
that one house and now we've got after
bidding wars on all the other four homes
now we've got a bidding war several
weeks later on on a house that had
listed at the same time as those others
I think we will see an increase in
these second waves occurring with homes
because of of how many homes now will be
coming on the
market and but how many buyers will end
up getting the short end of the stick
and not being able to to get their
preferred homes under
contract and number seven we talked
about this in the past and we're
going to talk about this in the future I
actually have training on this later
this week but the South Carolina
Association realtor contract which is
the contract that the vast majority of
residential real estate transactions
occur on utilize the the contract
that we call scr 390 form 390
it's changing how it handles repairs
they're completely eliminating the the
main section that talked about
inspections and repairs and it's
switching over to a due diligence only
contract I've discussed this a little
bit in the past and like I said I'm
going to discuss it again in the future
so I'm not going to get into the Weeds
on it but I will say this the short
version is that there's going to be like
never before in the green Market
non-refundable money required by buyers
non-refundable not the not the standard
we have gotten used to for years and
years that pretty much buyers are
guaranteed unless they completely
default on a contract they're almost
guaranteed to get their earnest money
back because the ball is in their court
that is about to change and and we
will talk about that more later but
the result the end result of that is
that those who are cash poor those who
have $110,000 in the bank for instance
for them to have to risk potentially
10 to 20% of that is going to be
incredibly incredibly risky obviously
and it's going to put Power in the hands
of those that have more money in the
bank less cash concerns and so I think
that that's something that that we're
going to see is that those that are
cash poor are going to find themselves
when this change happens is going to
happen in mid June so we're less than
two months away when it happens those
first-time home buyers or people that
are cash poor are going to find
themselves in a real bind and the people
that have money and are willing to risk
it they are going to to be in a real
position to succeed in the Market at
that
point so practically speaking so those
are my seven predictions but practically
speaking what does all this mean what
what does this mean if you're a buyer or
a seller in this market I have a few
practical thoughts first off I think
that backup offers can be even more
beneficial than in the past we've talked
about this before a backup offer some
people confuse backup offers they think
in a multiple offer situation that if if
one person has submitted an offer that
you can then be a backup offer no that's
not what we're talking about with backup
offers backup offer is when a contract
an offer has been accepted and a
house is under contract but someone else
submits a backup offer that then if the
seller accepts it that offer
automatically becomes the primary
contract if the primary contract falls
through well I've already said there is
a pretty good chance that we see an
increase in contracts falling through
due to the the way mortgage rates are
and and all the Dynamics there and as a
result I think they're could be an
opportunity for for buyers to get
homes non-traditionally by means of the
backup offer
process and that's something I've
helped multiple clients over the years
secure homes by means of backup offers
so there's a narrow number of homes
under contract that I feel like are
are quality options for submitting
backup offers but that's something
that is an important tool to keep in
your back pocket and something that
for certain homes it could end up
getting getting you in when otherwise
you couldn't otherwise you were just
going to get out
bid another practical point I think
that buyers and buyer agent that
identify second wave candidate homes
will have an opportunity to get
something under contract
without a bidding war in other words
let's say that you see these you know
five homes that that come on the market
in the same area very similar in in
in a lot of ways and you really like
two of the homes but you see that there
are three others that ju they just
aren't on par with the other two but you
also know that those other two have you
know 15 20 offers on
them someone that's Savvy might be able
to pivot to one of those other three
homes that aren't as desirable and might
find themselves in a situation where
they're able to make an offer without a
bidding war and get under contract at
that point and I think that if you're
able to identify those homes that are
candidates for second for having a
second wave there's a really big
opportunity there but if you wait until
the second wave happens you might find
yourself Just In Perpetual bidding wars
because like I said everyone else is
going to be looking at those properties
once they're in the second wave
another point I think homes and I
discussed this briefly earlier but
homes that are overpriced haven't been
penalized in this market as heavily as
in the past but that being said I
think there could be opportunities for
buyers to get something under contract
without a bidding war and maybe even
get the price lower than it should be by
targeting home homes that have been on
the market a while and I would say
that's mostly mostly homes that are over
that 300,000 maybe even over $350,000
price point are the are the main ones
that I have in mind when I'm saying that
um
but basically if you can keep track of
homes that have been on the market for a
while and this is something that I look
at occasionally I'll I'll you know if I
have clients that have just been
struggling to find something or get
something under contract then I will you
know take some time okay what has just
been languishing on the market and
sometimes there are opportunities there
to get something under contract and and
perhaps even for a lower price
because it was just overpriced from the
get-go from a seller perspective I I
think an important distinction that
sellers need to understand is they need
to know the difference between a second
wve property and an overpriced one an
overpriced property so a second w
property and overpriced property both
don't get a lot of activity but it's for
very different reasons the second wave
property doesn't get a lot of activity
because it's it's competing with other
properties that are better than it that
are nicer than it whereas an overpriced
property doesn't get a lot of activity
because it's just overpriced it's not it
they it's not worth what it's listed for
O overpricing A House Is is a bad
idea right we we already discussed that
having a second wave property you
can't control that if it's just you
know if your property is just not on As
Nice of a street as another property
like you can't there's nothing you can
do about that but it's important to
know the difference because if you're a
seller that is freaking out that you're
not getting as much activity as you
thought you would but it's simply
because of your competition that's a
completely different scenario than
freaking out over a home being
overpriced you should freak out if your
home is overpriced and you should hire a
realtor that is willing to stand
toe-to-toe with you and be honest with
you about what your home is worth so
that you don't overprice it that's an
extremely important distinction I
think as well buyers are just going
to have to take more risks than they
have in the past
currently you know a lot of buyers
are having to go the Asis route and now
we're talking about buyers having to put
more money on the line and listen
here is the the part of this that really
makes this difficult for buyers in this
market is that sellers are so confident
that they will just be able to relist
the home and have it sell right away to
someone else that they really if you
lose your earnest money if you if you
back out and like we're saying here in
June forfeit your termination fee
which is which is going to be the next
thing sellers aren't going to care
they're going to take that money and run
why because they're going to be able to
relist the home they might even get more
than what you had under contract for
buyers are going to have to take risk
and and just come to grips with that
that this is if they if you want to buy
a house in this market there is only one
way to do that and that is to take risks
and to recognize to understand that that
you're going to have to do that and so
you have to make offers with
conviction and and this is kind of my
final point here is that first-time home
buyers really need to have realistic
expectations and you know they need
to understand I I get a lot of questions
from people that are interested in in
you know making their first home
purchase and their questions show that
they think the market is what it was
four years ago the market is not what it
was four years ago it's not what it was
one or two years ago it is very unique
and very not buyer friendly and that's
just the reality of the situation we
just have to come to grips with that
and buyers are are going to have to have
and set realistic
expectations and and then make offers
with conviction you can't you know make
a lukewarm offer you have to make offers
with conviction and offers that you
know that basically exposes you to a
little bit of risk and that's just going
to increase when we when the contract
cont changes in June there's going to be
risk and if you can't do that then if
you're not financially in a situation or
with regard to your headp space in a
situation where you can do that then
this is just not the market for you to
to buy in now what is the market for
you to buy in well that's a great
question we who knows who knows when
the market will change and what your
personal financial situation will be
when that happens happens but it
doesn't make sense to be looking at
homes and to be making offers that just
aren't going to get accepted that
again we've talked about things being a
waste of time that's a waste of time for
everyone it's demoralizing you don't
need to do that so I try with all my
buyer clients to right at the very
beginning try to set realistic
expectations if I have clients that are
like Hey we're at this price point we
don't know if we can get what we're
wanting at this price point what I'll do
is I will actually look at the past
three months or so at their criteria and
and see what has sold the past three
months that fits their criteria and then
I will just send them those listings and
it's like hey do you see anything from
the past three months that you're like
okay for that price I think that this is
the home that that I would have liked
if the answer is is yes that's that's
a good sign okay let's move forward if
the answer is no
then you're not ready to play in this
market and so and and there are some
other ways of figuring that out as well
but that's that's a that's an exercise
that I've found to be very very
fruitful in the
past so all of that to say I think it's
going to be a crazy next few months I
think it'll be a fun next few months
despite all of what I said about it
being difficult for buyers I still think
there's going to be a lot of fun to be
had in this real EST State Market even
if you are a buyer as long as again as
long as you have those realistic
expectations but let's get out there
and let's let's buy and sell some real
estate together I am ready I am prepared
I have been training for this
moment I'm just joking kind of I'm
always mentally preparing for for the
next Trend to happen in real estate and
and I think I can help you guys out
if you need my help and so that is why
to conclude my contact information is in
the show notes if you need a realtor if
you need to talk real estate I'm your
guy and as always please rate review
And subscribe to the show have a
wonderful rest of the week enjoy the
lovely weather outside take a walk
play a little basketball outside
whatever whatever you like to do pools
aren't open yet but there's still a
lot of fun to be had so enjoy the rest
of the week stay safe and we'll talk
again next next time
[Music]