The Accunet Mortgage Show (8/23/2020) Episode
In this week’s episode, Brian and David report and compare statewide July home sales numbers, talk about the aggression needed to get your offer accepted in the current market, and outline the pros and cons of a legal non-conforming property.
This week’s highlights:
- Brian details July’s home sale numbers
- David and Brian discuss writing a winning offer in a new frontier
- Brian explains the nuances of a legal non-conforming property
The price of pent-up demand
This week, Brian lists off the annual sales prices and paces for Wisconsin homes in July 2020.
Since, as David pointed out, “people have been stuck in their 800-square-foot apartment with their husband and dog” all quarantine and have been dying to expand their living spaces, last month reflected the highest annual sales pace since December of 2006.
For the state of Wisconsin in the month of July, there were 9,738 home sales facilitated by a realtor, up 769 from July of 2019.
The median sales price for homes is up 10% from a year ago, statewide.
- In Milwaukee County, home sales totaled 12,048 (same as last July). The median sales price is up by 7%.
- In Dane County, home sales totaled 942, down 4% from last July, with the median sales price up 7.8%
- In Waukesha County, home sales totaled 717, up 6% from last July, with the median sales price up 7.6%
- In Brown County, home sales totaled 367, down 3% from last July, with the median sales price up 18.6%
- In Racine County, home sales totaled 329, up 21% from last July, with the median sales price up 17%.
David pointed out that it was likely that most of these buyers wrote their offers in May or June, just when the economy was bouncing back and there was pent-up demand for homes.
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No fresh meat in the market
Next, Brian circled back to his clients who contacted Accunet in late 2019, looking to purchase their first home.
This couple had to sell their existing home before buying a new one so they had money in the bank. They sold in February and began looking in the $300,000 range.
Because of that aforementioned pent-up demand for homes, the couple did not want to be conservative in their offers.
They wrote $25,000 over the asking price the minute they found a home they liked, with no appraisal contingency and no home inspection holding them back, and their offer STILL came in 3rd place. On the next home they found, they wrote upwards of $30,000 over the asking price to score an accepted offer.
Brian muses, in this real estate market of historically-low rates, is the way to get accepted a brazen cash offer with no inspection contingency and no appraisal contingency?
Most likely, competitors’ offers are the same in price, but cash, thus eliminating any question about financing or exponentially more than the asking price – which is the card that Brian’s clients played.
David pointed out that a high-demand market with such slim pickings can be a grind to formulate appealing offers, and emotionally trying to navigate. Because day-to-day there is so little “fresh meat in the market”, listing agents are adjusting their tactics as well, and setting a deadline so that all offers come through at a set time to create urgency.
It’s dog-eat-dog in the home buying market right now, so remember
Accunet’s tips for writing a winning offer.
The highest and best use
Lastly, Brian gave an update on his clients who got an accepted offer on a home situated on a one acre parcel, and included in their purchase was an adjacent 4.5 acre parcel of land.
Brian’s buyers initially wanted to buy both lots together for one price and put a mortgage on it, but Brian warned that the value of the lot next door would be compromised because choosing to bundle it in this way would impede them from ever selling the vacant lot as its own entity.
Brian said that Fannie and Freddie want any property to be at its “highest and best use state”, so if this couple were to keep the vacant lot separate, they would retain two seperate tax IDs and bolster either lot to its highest potential.
David brought up future zoning issues for their land: were the properties commercial or residential? Their appraiser checked the box titling them as a legal non-conforming property, to address the specific marketability of the lots. There is a plethora of legal hangups dictating what you can and cannot build in any given zoning type, and Brian wanted the couple to make the best use of their land!
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