Market Update with John Kirk
There’s a reason reporters grab the quarterback as soon as he’s stepped off the field. It’s your best chance to get a raw, unrehearsed take on the pressures of the game. John Kirk is our QB. And like a good leader in the trenches, he’s intimate with real-time data, making adjustments with every new challenge and winning big in crucial situations. We recently cornered John to see what market dynamics he’s seeing deal-by-deal, play-by-play.
JOHN, WHAT’S YOUR QUICK TAKE ON THE DMV’S MARKET COMING OUT OF THE FIRST WEEK OF SEPTEMBER?
J: The homes that are priced right and look their best sell fast - a week or less. Typically, there are not 10+ offers like there were 20 months ago. Sometimes, though, on the right property, that does happen. We had 18 offers on a home last week, for example.
SO THERE ARE FEWER COMPETING OFFERS. DOES THAT MEAN THAT BUYERS ARE LESS AGGRESSIVE IN THE TERMS OF THEIR OFFER?
J: We’ve seen a few occasions recently where there is only one offer on the first weekend - but that one offer is out of this world GREAT. In fact, in the last 30 days, I had four closings in a row where all of the deals sold in the first week but had just ONE offer. All of those deals had few or NO contingencies, and all of them closed significantly over the list price. Here are the percentage increases: 9%, 1.5%, 14%, 3.5%. Interesting, right?
WOW! ELEVATED PRICES WITH JUST ONE OFFER...AND FAST? HOW DO YOU ACCOUNT FOR THIS?
J: Marketing really matters. How did we get such a bump in price on the homes I just mentioned WITHOUT multiple offers? First, these results are intentional. Because we were “coming soon” for one week and didn’t allow interested parties to tour the properties, it created a buyer frenzy. Our marketing allowed me to have leverage to negotiate from a position of strength. This is the singular goal. Because of this leverage, buyers felt like the opportunity was going to pass them by if they didn’t act quickly with their absolute best offer. It might be easier to sell a home for $85k over the list price when you have 10 offers. When you have only one, though, that’s a whole different story. Marketing with an exacting pricing strategy allows me and the team to deploy our negotiation experience. These sellers had to trust our process, and it paid off massively for them!
WHAT WOULD YOU SAY TO FOLKS WHO ARE ON THE FENCE ABOUT BUYING RIGHT NOW?
J: When great inventory hits the market, sleepy buyers awaken! I say often: “If you like it, other people also like it, and you’ll need to be ready to compete.”
LET’S TALK ABOUT WHO THEY ARE COMPETING WITH. WHAT ARE YOU SEEING BESIDES STRONG TERMS?
J: DMV statistics through August reveal that 20% of all sales are CASH. And that’s with the single-family detached home selling at an average sales price of $894,000. Those same DMV stats also point out that 11,000 FEWER homes have sold this year vs. last year. That’s a 25% decline in inventory and $1.3B less sales volume year-over-year.
THAT’S INCREDIBLE. THERE’S GOT TO BE SOMETHING BEHIND THAT DECLINE IN HOMES LISTED. WHAT TYPE OF FOLKS ARE SELLING THEIR HOMES THESE DAYS?
J: The average seller profile has absolutely changed. Folks who are just looking to move because they want a bigger mudroom or more kitchen cabinet space are inclined to keep their 3% mortgage and stay put for now. More than ever, we are seeing clients who are compelled to move for one reason or another. For us, we pride ourselves in being that consistent and steady guide to routinely help our clients navigate difficult circumstances.
WHAT ARE YOU SEEING IN HOW INVESTORS ARE APPROACHING THE MARKET?
J: Investors are on the hunt for long-term hold deals. The margins on flipping homes have decreased, and the capital needed to get started is significant. Putting together a portfolio of rentals is the path we are seeing investors take. The investors who are winning big are the ones who have strong cash positions. With the cost of money as high as it is today, cash is king both in making the deal happen and keeping margins attractive.
