|Daytona Beach Real Estate & Community Events blog. By Lisa C. Hill, "THE SMART CHOICE!"|
I was recently reading some interesting information about the last seller's market we experienced. The article mentioned a few things I had not previously given much thought. But the one thing that really jumped out at me was the fact that during the fastest and most-drastically peaking seller's market on record, many real estate buyers, upon finding the house they wanted; in their attempt to procure an advantage over other real estate buyers, chose to forego their inspections. They used this as a negotiating point.
Now for those of us who have been in the real estate business a while, we experienced some really crazy negotiations and transactions during the seller's market. I personally had many listings that sold within days, or even sold immediately, along with several other offers at the same time. And of course, many homes sold for well above the asking price. I also worked with buyers who knew they had to make their highest and best offer. So they made offers over the asking price, with a closing date that was as fast as the mortgage (or mortgages - we won't go there) could be completed. Yet sometimes this was still not the most appealing offer to the seller, so another offer would win and procure the sale. Things certainly have changed, haven't they? But I digress.
Going back to my initial thoughts; by choosing to have no inspections, in many ways, real estate reverted back to an industry that was detrimental to buyers. We had gone back to Caveat Emptor or "buyers beware". It was becoming an industry that our government long ago passed laws to change, with the intention of preventing it from happening again. This is why we now have property disclosures, mold disclosures, insurance disclosures, HOA and Condo disclosures, and contracts that are drafted by attorneys, with constant updates. In addition to these addendums and updates, our contracts are filled with clauses that explain every possible scenario and remedy, to help both buyers and sellers of real estate. These scenarios are mostly based on past problems that have been encountered. The knowledge of these problems is what causes our contracts and our industry to constantly evolve. And this constant evolution is why all real estate licensees are required to take continuing education classes and renew their real estate licenses every two years by either taking a test, or producing documentation of the required amount of continuing education credits to renew their real estate licenses.
So what we saw happening in the extreme seller's market, was a trend beginning to develop in which buyers decided to forego the inspections to which they are legally entitled; and where sellers began to assume that they did not have to disclose the known problems about the real estate they were selling; or those same sellers chose to reject any offers that were properly presented (and that might uncover something they had hidden) because they knew that eventually a less knowledgeable buyer or real estate agent would stumble across the real estate they were offering. The entire real estate industry and every party involved, would suffer if we did not have the legal requirements today, that we lacked in the past... back when Caveat Emptor ruled all real estate transactions.
So these changes we've been experiencing in the last few years, may not be all bad. No, I can't deny the negative impact that many people have experienced. Losing a home is one of the worst things I can think of. But from a strictly clinical standpoint, this time of real estate correction, may be more beneficial than we realize.
- In some markets, real estate had become drastically overvalued. A correction was needed.
- In the mortgage industry, many standards had become too lax. A correction was needed.
- And in the real estate buying process, MANY things needed to change! For starters, too many people thought they could get a real estate license and "get rich quick". In doing so, these agents were not in it for the long haul, therefore they did not treat their clients in the manner which they deserved. As the market cooled, many unethical agents left the business. That is something for which we can all be thankful! (Unfortunately, many excellent, long-term agents have also suffered, so please don't think I'm making light of this real estate market.)
- As my initial topic indicates, one of the benefits of this ongoing real estate market correction is the passing of the slippery slope of Caveat Emptor! Since buyers now have plenty of choices for their real estate investments, and are once again able to take their time in making their decision on how they want to invest, sellers must do whatever it takes to make their property stand out amongst all the competition. One example of pushing your real estate for sale, ahead of the competition is to have a home inspection aheada of time, and make all repairs BEFORE the house is placed on the market. And disclose, disclose, disclose!
- Today's real estate buyer is savvy. And with the many choices that are available to them, they have no reason to tolerate anything less than perfection. Todays buyer wants a house that's in move-in condition. And if they see a house that's sub-par compared to the competition, then they expect to pay a lot less, if they're expected to even lift a finger.
It's ironic how everything goes in cycles. And what goes around, comes around. Today's real estate market is the exact opposite of the markets of just a couple of years ago.
So if you're a real estate buyer, be sure to have the inspections to which you're entitled. And if you're a real estate seller, be sure to fully disclose all known problems, both past and present, with any residential real estate you're selling. And for both real estate buyers and sellers, be aware that real estate agents are not allowed to give legal advice, or to act in any manner that is outside the scope of their real estate licensing. So if you ever have any questions about your home inspection, you'll need to ask your home inspector those questions. If you have questions about your termite inspection, you'll need to ask your termite inspector those questions. And if you have any legal questions, you'll need to consult with a real estate attorney.
Here in the Daytona Beach area, even though we always recommend our clients have legal representation, it's actually rare for real estate buyers and sellers to be represented by a real estate attorney, other than to hire one to handle their titlework instead of using a title company; or, if there are extenuating circumstances such as divorce, estate settlements, etc. But in some states, the law actually requires that all real estate buyers and sellers be represented by an attorney. Regardless of your personal opinions on the matter, if you have legal questions, you will need to consult with a real estate attorney. Your real estate agent can lose their license for "attempting to practice law".
Also be VERY aware that you cannot under any circumstances, violate the Fair Housing Laws which indicate that you cannot discriminate against anyone who is in a protected class. In real estate, the classes for which you cannot discriminate are race, color, nationality, sex, religion, familial status or handicap. Never, is any real estate buyer, seller or licensed real estate agent allowed to discriminate. And any conversation that ventures into the area of discrimination is banned as well! So DO NOT discuss anything that even remotely touches on any area of discrimination. And definitely do not discriminate!
In closing, Welcome back to a more balanced real estate market. One that is not an antiquated business of Caveat Emptor! So real estate sellers, make sure you're prepared, in THIS market! (Click the preceding link for information on how to prepare your house to sell.)
To buy or sell real estate in the Daytona Beach area, make a Smart Choice and contact Lisa C. Hill with Adams Cameron & Co., REALTORS®.