Should I Just Call the Listing Agent? (The Myth of the "Direct Deal")If you are browsing homes on Zillow or driving through a Redlands neighborhood and see a "For Sale" sign, your first instinct
Price Cuts Are Coming - September 2022
Dated: October 15 2022
Views: 73
Price Cuts Are Here...w/More Coming!
Prediction - at current interest rates, prices will drop 15-25% in the next 6 months.
Or more plainly said, that house that is listed for $600,000 tomorrow, if it's not perfect, will probably sell for closer to $500,000.
Warning - longer newsletter with a little bit of math.
So here is the math, in September of 2019, you could purchase a 3 bed, 2 bath moderately updated house in Redlands for $415,000. That would require a minimum of $25,000 cash to close (assuming 5% down payment + closing costs) which would result in a payment of $2,600/month*.
Fast forward to today, in just three years that same home would be listed for $600,000, but here is the kicker, interest rates are 50% higher (4% in 2019, 6.2% today). Meaning it will need an extra $10,000 for your down payment AND $1,700+ MORE per month!
$4,300+ for a 3 bed, 2 bath, not so updated house.
That is INSANE!
Feeling a little dejected? Here is where the math gets fun.
If we make the assumption that prices got out of control and we are willing to accept 20% annual increases in our monthly payment over the last 3 years, we are 'only' 4.6% over priced. Meaning that $600,000 house should be sold for $572,400.
BUT...and this is a big but, if you think 20% is insane (because it is) and are more willing to 'accept' a 10% increase over the last 3 years (still double the historic average), prices should be 26% lower! Or in the case of that $600k house...time for a $150k haircut.
Each of these is a bit extreme. But funny story, before running this experiment, I was working with a client on a recent offer and we had landed on bidding 14% under list price....this is the most aggressive we have been on the buy side in years!
I'll let you know how it goes.
-Patrick
PS - If you or anyone you know, need to buy or sell, would you please introduce us? I promise I will take great care of them!
Patrick Edgett
Hi I'm Patrick Edgett, I live in Southern California, I am a realtor. I am a #girldad to four amazing humans!In my past life I have worked on marketing campaigns for the governor, prod....
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