Today, I received the following email from a buyer.
I like this home very much. I saw a YouTube video of this house from Feb. 2012. The asking price then was $189,500. I can see that the seller made upgrades to the kitchen, flooring, etc. but did he make $58,000 of improvements to justify his $248,000 list price?
Here is the response I sent to this buyer:
First of all, let's address the improvements. I'm not the listing agent so this assessment is based upon my visual observation. The sellers made several cosmetic improvements including hardwood floors throughout much of the first level, new ceramic tile flooring in the kitchen and baths, painting kitchen cabinets and installing granite countertops, re-carpeting bonus and bedrooms and painting. The master bath was upgraded to a tile surround shower. I'm guessing they may have spent $10,000 to $20,000 on these.
The difference between now and 2012 is two-fold:
1. They made improvements that buyers desire. Buyers now want turn-key homes. They don't want to make any improvements and are willing to pay top dollar for a home that is move-in ready.
2. The housing market is a different market than it was three years ago. There is a shortage of inventory in many Franklin neighborhoods but the demand for move-in ready homes is high. When the demand is high and the inventory is low, prices go up. In 2012, when the seller tried to previously sell, the demand was low and the inventory was high. Consequently, he was never able to sell. That same house listed $58,000 higher is already under contract.
Franklin home buyers are growing frustrated. Homes that are move-in ready are going under contract the first day on the market. In some cases, homes that come on the market at 8 a.m. are already under contract by noon. It's likely buyers are offering prices in excess of the listing price to get the house.
A small 1,600 square foot house priced at $250K in historic Franklin came on the market a few weeks back. It had over 50 showings and recently closed for $300K, 20% over asking price. It was a cash buyer who waived the appraisal contingency.
This type of behavior is making it hard for buyers. There are three pieces of advice that I give to home buyers:
1. Get pre-approved. It's very likely you'll be up against multiple offers. Having a pre-approval in hand can make a difference.
2. Hire a real estate agent. These homes are moving so quickly, it's unlikely you'll get in to see it before it sells. Hire an agent who can watch the market for you and get you in for a showing quickly. Hesitate a day and a house of interest may already be gone.
3. Don't research previous home prices. What a house was listed for in 2012 has absolutely no bearing on our current housing market. The only comparables that matter are homes that have sold within the last 3 months. It does you no good to lament over what prices were in previous years. Likely all it will do is frustrate you at the current state of our market.
I moved here in 2006. The housing market then was much like it is now. Although I paid fair market value for my house, some might say I over-paid for the house I bought. However, I would have had to wait five years to get a house at it's lowest in our market. That would have been crazy. Who waits five years just to buy at the lowest time? Not to mention, we don't recognize the lowest time until we've already passed it.
Prices aren't determined by real estate agents. Prices are determined by home buyers and right now, home buyers are willing to pay a premium to get the homes they want.
When you're ready to buy a Franklin TN home, contact Tammie White of Franklin Homes Realty LLC at (615) 495-0752.