Buyers & Sellers: PART 1- What an experienced Realtor© wants you to know. Offer terms and negotiations to consider.

We begin this two-part series with the psychology behind the demand for homes. COVID definitely accelerated the already trending sector of multigenerational home purchases and the urban to suburban move for buyers.  In this series, we'll take a look at the inception of the idea to purchase a home outside the city.

April 2020, NYC renters and condo/coop owners in large cities at the epicenter of COVID have some life changing realizations A) their office and workplace, the reason they live in the city, will not be reopening on a large scale. Their work from home options may have them traveling into said office once per week but the downsizing of the space will have them working from home indefinitely. B) Their children’s school has opted to stay virtual for the remainder of 2020 and potentially 2021. Leaving 2 working adults and a child in an 800 square foot apartment, in the middle of NYC, during a time of stay at home orders, with no outdoor space, no availability to spend time in other people’s homes, or visit nearby grandparents due to the risks. C) What if instead of staying in their now shrinking condo/coop or rented apartment for $5,000 per month, they decided to move? They can obviously sell this home or use their savings to put a down payment on a home that has all their needs met; large yard, 2 baths, 3 bedrooms. They even start to wonder, if it would be best to bring their family together into one home, filling the void for childcare and future eldercare all in one. In their minds, this home would be near a train station so they can still get into the city when they needed for work, but since it would not be a daily commute, one day of commuting an hour to and fro would not hurt. Their main motive for even thinking about this move: SPACE. For the monthly rent or current mortgage they have, they could own a large home with enough space to make everyone happy and create a sense a broader sense of home, maybe something they had only considered many years into the future.

I get the call. “Hi, My name is Lisa and we are looking at homes in New Jersey, we currently live in NYC and although we don’t know much about New Jersey, we would still need to stay close to train line to NYC, for the occasional commute in but not the daily.” I ask them about their needs: “Thanks for reaching out to me Lisa, I’m going to ask you a few questions to get a better sense as to how I can help you and educate you about the process.” Lisa divulges: “We have a child and are considering having another child, we realized we miss our family and would like to have my in-laws, move in with us, we also need 5 bedrooms, 3-4 bathrooms and a large yard for everyone to be able to go out and possibly even a pool for the summer. It should be relatively move-in ready, we don’t have the time to get into a construction project.” I ask about their timeline as well as their lease if there is any or current equity on their home now and I explain the buyers process in the state of New Jersey. After our conversation I immediately refer a few mortgage lenders I’ve build a rapport with throughout my years in the real estate business. A few hours later or the next day I check in with Linda: “We’re preapproved for $1.5 million but would like to keep it at the $1.2-1.3 million mark.” Me: “Okay have you looked into what towns you want to move to? Linda: “I do not know New Jersey very well, but I from looking online, it seems we can afford more home there than in say, Brooklyn or Long Island.” Me: “Let’s start with all towns along the NJ Transit Train line direct to Penn Station NY and then we’ll refine as we go.” Linda: “GREAT! EXCITED!”

I do what I do every time I’m looking for homes for my buyers, I do research, what is their budget truly getting them in one town vs another? Why are there no listings in a specific town at all in the past 3 weeks? What is the actual absorption rate in one town or the neighboring town?

These details are important because as I start to call seller agents, I experience the realization that the suburban markets are having their moment. “That home is available but we have 3 offers and are going to highest and best after this weekend’s open houses, where we expect more offers.” My favorites were coming soon listings where the seller agents would say to me “No, it’s not yet on the market, but we priced it to receive several offers, so we will be listing it on Thursday and the highest and best deadline is Monday at 12pm.” Seller’s markets are not my first rodeo.

In my second year as a licensed real estate agent, it was 2014/2015, Jersey City and Hoboken were starting to see an increase in new home constructions and renovations. Investors were buying land up throughout the city and every single home that hit the market throughout that time, went to highest and best. It really did not matter what condition it was in, or even if it had been gutted to the studs, the place I called home since 2003, was considered hot and I decided to get into home investment at the time as well.

My experience with my buyers during those years, helped me learn how to position them to win bids and how to negotiate terms with a seller’s agent before I even show the property.

My first sale, after all, was a multi-million dollar mixed-use building in the middle of Downtown Jersey City at the crest of a time where any investor who wanted one, could not get one. I negotiated terms for that sale for what seemed like a lifetime, with little guidance, lots of calls to attorneys for information on terminology I did not fully understand, a lot of reading contractual revisions and when it closed, 6 months later, I learned some of the most important lessons a real estate agent can pick up. The business of negotiations. It’s something that can be taught but in real life real estate transactions (NOT REALITY TV), negotiations do not take a split second.

Fast forward to Spring 2020, Linda, her family and I saw roughly 15 homes over 2 months, basically all new home listings in the areas they preferred were seen immediately when they came on the market. Linda would rent a car and drive in from the city while I met them at every property and took careful intake of what we were looking at, to help them in their decision. Twelve offers were lost to other buyers. 12! Why were 12 of those offers lost? I’ll explain in part 2. Stay tuned.

 

If you are thinking of buying real estate and already own a home, let’s chat about your options. Michelle Mumoli, 917.268.8916