They say that the result of the perfect negotiation is that neither party is entirely satisfied. That sums up the Summit County real estate market pretty well right now.
Sellers still expect 10% more than the last sale and buyers are already prickly about the historically high price they are going to have to pay. The result is inspections are becoming a hard negotiation instead of sticking to items of safety, habitability and working condition. Sellers are very resistant to concessions thinking that there will be another desperate buyer along any moment.
At the end of the transaction we often have two parties who both feel shorted.
Realtors know that there are elements of truth in both positions. There are enough buyers to keep demand higher than supply, but if the seller blows the first one off the holding costs of increased time on market may outweigh the gain of another offer. And some properties get a reputation for difficult dealing which never helps.
If there were a normal number of properties for sale, our market might be in trouble because demand is actually not increasing. The number of properties sold over the past few years been essentially flat. But the lack of inventory has created an artificially “hot” market that could evaporate if events move everyone to sell at once. It’s happened before. Think 2009.
Meanwhile prices increased by15% last year. Higher prices take some buyers out of the market due to sticker shock. Rising interest rates this year means other buyers can no longer qualify for a mortgage.
Realtors are always walking a tight rope between buyer and seller expectations. And the disconnect between those expectations has rarely been greater.
Sellers need to remember that if the national economy or world events change substantially, the number of buyers will probably decline and the number of properties on the market will increase.
Summit County is still a second home market and those buyers don’t have to buy. Our primary home buyers are usually stretching to get into the home already and any problem can take them right out of the market.
At any moment, Summit County’s market momentum could tip back towards buyers. This will require flexibility, a concept that has been dismissed by sellers for quite a while in our market.
Sellers may need to price more aggressively than they are presently willing to do. This doesn’t mean slashing the price or “giving the property away”. It means pricing with or even slightly below the last sale. That will probably still bring the highest price ever paid.
Buyers need to recognize that there is an historic low number of properties for sale, prices are increasing and for as long as that lasts, sellers have leverage.