Hard to Play Real Estate Game When Rules Keep Changing
A new phenomenon is creeping into Denver that is posing an enormous problem for the 2020-plus buyers and sellers
Like a game of Whack-A-Mole at Chuck-E-Cheese, it would seem that every time one low inventory-fueled abnormality pops up, another takes its place just as we begin to wrap our heads around it.
Desperate buyers seeking to find a way, any way, to snuff out the competition seem to be cultivating creative ways of getting homes. The “love letter” and “love video” are old news as round trip tickets to Europe, season passes to sporting events and even personalized gifts are attempting to set homebuyers apart. While we’re seeing more and more of these efforts in our market these days, the new methods are beginning to challenge the very ways in which we do business – namely the pricing, appraisal and even marketing of homes.
Only a year ago, and for a great many years before that, when pricing a home, your REALTOR® could research comparables in any given neighborhood – analyze their marketing days, percentage of list price to that received and even pour through the commentary we as REALTORS® make accessible via our MLS.
Now, however, a new phenomenon is creeping in that is posing an enormous problem for the 2020-plus buyers and sellers; off-market sales. When a seller’s broker can privately market a home, perhaps to their office or other industry colleagues, procure a sale and close the deal without even hitting the MLS, the danger, albeit against MLS regulations, is that little to no information is known about the home. Was the kitchen remodeled, did the home have AC, a view, a toilet in the middle of the living room. With so few actual sales going on in many Denver-area neighborhoods – and now some of these off-market sales – we are left to make an educated guess as to that home’s comparability. We are left to pour through assessors’ data which presents its own challenges. While bedroom and bathroom counts are likely accurate in new construction, many of Denver’s more mature neighborhoods, where homes have been updated, remodeled, customized and basements finished, the data may not be nearly as accurate. With off-market listings now becoming a more common occurrence, the problem we face is how to value neighborhoods with limited information moving forward.
When we pounded the little bank-owned mole back into its hole, we got a new mole, the: “Oh no, we haven’t built anything for seven years’ rodent.” Once we started pounding that little guy back in to the ground (which we are still working ever so diligently at) we ended up with record-setting low inventory. What has resulted is that while we work on getting those two creatures back where they belong, we have the desperate nuisance coming up now and before you know it, three little guys’ heads are popping up and the lot becomes a much bigger endeavor to tackle.
The solution, the answer to winning the game, grabbing those tickets and redeeming them for an enormous teddy bear which, in this case is a balanced market, is supply. We cannot limit our ability to whack a few more of these moles back into the ground by limiting growth and putting constraints on the housing industry. That approach would literally take the stick out of our hand and result in a certain ‘game over’ scenario. No tickets, no prize for you.