02/16/2022
OWNERSHIP IS WINNING
As a realtor, I get to see a lot of things that are behind the scenes. I meet with other agents, property investors, appraisers, realtors, brokers, and lenders. I learn from their experiences with customers, absorb their knowledge of the housing market, and get their take on what the future holds. Now if you didn’t know by now, we are in a seller’s market.
Now you know.
What does a seller’s market mean?
A seller’s market is when price power is in the hands of people that have houses to sell. Not in the hands of the people wanting to buy those houses. In a seller's market, buyers do the “money dance” to “entice” the sellers to sell to them. A buyer or buyer's agent will have several strategies for their buyer which will make an offer more attractive to sellers. This can range from paying above the asking price or making riskier moves such as skipping a home appraisal, skipping a home inspection, reducing or removing concessions requirements, or all of the above!
Now, if you are a seller, you should understand the beauty of owning a home, and how, in this realtor's opinion, owning surpasses renting.
STORYTIME:
I recently met a couple selling their home here in Orange Park. In this hot market, as expected offers started coming in for the house on the very first day. They bought the home in 2015 at a price of $315,000. They’ve sold it in 2022 for $530,000. That’s a profit of $215,000 in only 7 years!
Furthermore, sellers sometimes entice buyers by offering to pay a part or all of their closing cost. This is called “sellers concessions.” These particular sellers offered NO concessions, which means, they didn’t have to give the buyers anything. Who wouldn’t love a nearly quarter-million-dollar boost in their pockets after living in a place for only 7 years?
Looking at their situation, you should also see that after the sale, this couple has effectively lived in this beautiful house for FREE, THEN WALKED AWAY WITH BIGGER POCKETS!
That is called “WINNING!”
I sold a home where the couple bought it for 45K back in the late ’80s. They raised their kids and finally decided it was time to leave. After they had paid it completely off, they sold the house for $245, 000, walking away with a clean $200,000 in their pockets. Once again, they've effectively lived in the house for over 30 years for FREE 'AND' WALKED AWAY WITH A PROFIT!
That’s also called “WINNING!”
Can anyone tell me a story where renting allowed the renters to live there for free and accumulate wealth in the process?
I DON'T THINK SO.
Did you know, many of today's millionaires began on their path to riches by owning real estate? According to the book Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechterthe, the key to riches is to invest in appreciating assets. According to Mr. Wonderful on Shark Tank, each of his dollars is like a little soldier that he orders to go out, take other money prisoner and return it to him. The bottom line is:
Make your money ALSO MAKE MONEY!
What does that mean?
That means investing your money in things that will make you money, like land, real estate, or houses. There are stocks and bonds that will do the same, but REAL wealth comes from REAL things…like LAND & HOUSES!
Here in Florida, there has been a trend of investors from New York, California, Chicago, and other states moving here because of the tax breaks and the weather. A house, priced properly, will stay on the market for less than 24 hours. This trend isn’t going to stop anytime soon.
As for renting, the prices are expected to increase an additional 14% this year. That’s ON TOP of the 18% it increased last year. In 2021, I met a couple that was planning to purchase their first home this year. They were told by their landlord that their rent would increase by $500 at the beginning of 2022. If they couldn’t pay it, they should plan to move out.
MY JAW DROPPED!
Unfortunately, the couple’s credit was very bad and they didn’t have any savings to put on any home.
This is called “NOT WINNING!”
Now, when buying a house, the rule is to typically put down 20%. This means a home costing $100,000 will have a down payment of $20,000. But according to the National Association of Realtors Nadia Evangelou, senior economist and director of forecasting, most homebuyers put down just 7%. If we use the same $100,000 scenario above, instead of $20,000, they only have to come up with $7,000. That's a difference of $15,000 that doesn't have to be brought to the closing table.
So, what's the problem with getting into a house?
The problem is supply, as in the number of homes available to buy. It's a simple supply and demand issue. Houses these days are selling so fast, in order to SLOW THE PROCESS, PRICES MUST SKYROCKET! Here in Florida, houses that usually sell for let us say $100,000, are being bought, with ZERO requirements on the part of the seller, for $50,000 to $80,000 above the asking price.
FOR CASH!
People who typically qualified as first-time homebuyers, and had incomes between $75,000, and $100,000 are now, qualifying for fewer and fewer homes!
What does that mean?
Look at it from this perspective. The average income of a family on the lower end of the pay spectrum, according to statista.com was 45,870 in 2020. We see that 'FIRST TIME' homebuyers with incomes between $75,000 and $100,000 are finding it almost impossible to just qualify for a home. So, if you are on the lower end of the pay spectrum, and you don’t already have or own a home, you will probably be renting for a very, very, VERY long time … or be homeless.
So what now?
These are all signs. I’m sure you have seen a rise in food prices, the lack of items on store shelves, a rise in gas prices, a rise in the price of a vehicle, and now a lack of housing. The signs are saying, we all must stop planning for just tomorrow. We all need to plan for the next 3, 5, and 10 years.
That's what rich people, the military, and successful businesses do?
If you just look at the state of the economy today and do a few internet searches, you can see that all the things going on now were planned years ago!
But that's another story!
We each need to ask ourselves this question:
If I continue to do what I did yesterday, tomorrow, what will my life look like in 3, 5, or 10 years?
The question, if asked and answered honestly, should SHOCK you into changing SOMETHING!
As for real estate, property ownership is WINNING!
Our economy exists mainly on credit, so the first step to buying a house or buying property is not saving, but getting the credit score up. There are hundreds of programs out there that specialize in just that area. The NEXT is to SAVE, SAVE, SAVE! Even though your credit might increase, don’t let anyone fool you into thinking that you won’t have to bring ANYTHING to the closing table. You WILL have to bring something.
So, if you are currently looking for a realtor or just someone to bounce ideas off of concerning property, give me a call or drop me a line here.
I don’t know all the answers, but I DO know how to find them.
Stay Safe and Keep Winning!
