Cynthia De Riemer: In The Press
SOUND OFF: CYNTHIA DE RIEMER
How to Handle Obstacles June 24, 2022 | Greenwich Time
Here is a home transfer scenario that is all too common: The seller of the home has accepted the buyer’s offer; inspections have been completed, and the contract has been signed by all parties. Then Kazoomie! Something unexpected happens, even though the buyer and seller have been well-advised and checked all the boxes on the pre-closing to-do list. The result of this surprise could be a delay in the closing or the cancellation of the contract.
The most common delay-causing surprises are a byproduct of the buyer’s loan approval. Even though the buyer may get “pre-approved” by a bank, banks require many documents and sometimes these aren’t called for until late in the pre-closing phase of the sale. Lenders must follow regulations, and they will not issue a loan commitment until these items are fully vetted and approved. In a rising rate environment, such as we have today, delays can be very costly to the buyer.
The biggest “nail biter” for sellers and buyers alike is the anticipation relating to the bank’s appraisal. This is a particular concern when properties go to contract well above asking price, which is a common occurrence in today’s market.
In the pandemic-inspired “sellers’ market,” the worry about bank delays favors buyers who can afford to pay all in cash or with a high proportion of cash-to-debt.
Other issues that can disrupt a closing include a negative impact on the buyer’s credit rating. This can occur if credit card debit increases, if bills are reported as unpaid, or if there’s been an unfortunate loss of a job.
There might also be title issues that the seller needs to “clear” prior to closing, such as mechanics’ liens, open permits or unpermitted improvements, or restrictive deed covenants. Purchasing a co-op property may require the added step of co-op Board review and approval. These co-op boards often require references, personal interviews, and financial disclosures, even for an all-cash deal.
What’s the most sure-fire strategy for a seller or buyer to initiate against surprises? They should engage an experienced Realtor who has dealt with a full spectrum of potential issues and who has a support team of professionals, including lawyers, inspectors, lender relationships, and tradesmen to help mitigate or manage last-minute surprises.
My credo: Hope for the best, and plan for the worst.
SOUND OFF: CYNTHIA DE RIEMER
How "The Process" for Buyers is Different in this New Market March 21, 2022 | Greenwich Time
The home-buying process in Greenwich, and the mindset of successful residential buyers, is entirely different in 2022 from what it was just two years ago. Back in “the old days” single-family home buyers had the luxury of a Greenwich market that had plenty of for-sale inventory, resulting in a state of equilibrium between buyers and sellers. To wit, at the end of February, there are 182 single-family homes on the market in Greenwich, compared to 376 a year ago. A metric that dovetails with inventory relates to the time it takes for a home to sell: Time on the Market for Greenwich homes is 51 days today versus 111 days a year ago. How does this seismic shift in the seller-buyer balance of power impact the home buying process in our town?
For starters, sellers are seeing many more offers on their homes today than they would have a year ago, and many homes are selling for a premium over the asking price. Therefore, sellers can be more selective about the qualitative elements of the offers. Going beyond the dollar bid, sellers can be more demanding about the offers’ contingencies, whether the buyer is well capitalized and liquid, and how easy the buyers will be to work with.
Consequently, a buyer needs to not only lead with a high offer (which frequently means exceeding the asking price), but may also have to waive some or all contingencies, including a physical inspection of the home. A key element of the offer is financial preparedness, so the buyer should be pre-approved for a mortgage that will accommodate a potential bidding war premium on the price. Any offer predicated on a bank appraiser getting to the magic value will not be looked on favorably by most sellers
today since appraisers typically rely on historical, i.e. meaningless, sale comparables data. If paying all cash, the buyer should present proof of funds.
There are many other tools a buyer can use to improve their offer. For example, they should be flexible with closing dates, and be willing to accommodate a seller that may want to remain in occupancy for a few months while they prepare to move elsewhere.
This is a tricky market for both sellers and buyers, and a good realtor will not only manage their clients’ expectations, but will also manage the strategy and timing of presenting an offer or preparing the seller and the home itself for a sale.
It’s important to remember, that although we don’t know for how long, these market conditions won’t last forever which should incentivize homeowners to sell and give hope to prospective homebuyers.
SOUND OFF: CYNTHIA DE RIEMER
Low Inventory Ramifications January 2022 | Greenwich Time
Everyone who owns or wants to own a home in Greenwich is probably well aware of the issue of low inventory of homes for sale. At the end of the first week of 2022 there were 158 single-family homes for sale in Greenwich. Typically there are approximately 500 homes on the market this time of year. The obvious result of this is the evolution of a sellers’ market, causing prices to increase significantly. Single family home prices were up 10.8% in 2021 over 2020’s Median price, which was up 11.6% percent over 2019. What are some of the other byproducts of this market imbalance? It creates problems for sellers, because they cannot find a suitable downsize or upsize home to move into in Greenwich or in many other sellers’ markets. This may require that sellers reserve the right to rent the home after it is sold to allow them time to find a suitable relocation option. With less inventory comes shorter time on the market. This means some buyers will not have enough time to visit a property in person before submitting an offer. That means sellers still need to prep the house thoroughly, fix any deferred maintenance, and stage it well for virtual tours since more bidders will be leaning on these virtual tours to make their offers. For buyers, a general comment is that you’ll need to be flexible on a number of fronts. You may have to buy a home that doesn’t check all your boxes as the perfect dream home. You may have to waive various contingencies, including physical inspections, in order to be competitive with other bidders. You may also have to wait before you can move in to allow the seller more time to relocate or fix some things in the house. Of course, you will also need to be preapproved for a mortgage or be willing to waive the mortgage contingency. And finally, don’t be surprised when the pricing quickly gets to a level that is higher than the asking price.
Covid has been a major disruption in the real estate market, but even if Omicron or other variants run out of steam, we are still looking at a period of rising inflation and other global issues which could keep housing inventory low for the near future. Prospective buyers and sellers would be wise to start educating themselves on valuation and marketing strategy with the help of an experienced realtor.