Alvin “Chip” Wagner III, SRA, IFA, SCRP is third generation appraiser from Chicagoland who is a public figure and well respected within the appraisal industry. He runs the firm A.L. Wagner Appraisal Group., which has been providing appraisal, consulting and research services throughout the Chicagoland market for more than 35 years. I met Chip through RAC (Relocation Appraisers & Consultants) and have learned a lot from him. Like me, he has an enthusiasm for market analysis. Its great to have him share his insight on Soapbox.
Chip breaks down active inventory into two categories: Tastes Great or Less Filling…
The oversupply of inventory makes it very difficult for homeowners to sell their home. Many agents are telling me there are more buyers active right now as we are enter our Spring market, yet it remains a challenge. The buyers have many properties to look at. Homes are still selling but unfortunately the types of homes appear to fall into two major categories: Looks Right and Priced Right, everything else in between is sitting unsold.
The houses that Look Right are those that stand out above the competition. They have positive attributes that their competitors cannot match. This may include Location/Site features such as a cul-de-sac lot with reduced front yard traffic, or a view of the park or Forest Preserve. It could also include homes that have been remodeled that stand out above its competition; e.g., adding trendy features such as granite countertops and stainless steel appliances to the kitchen. Or it could be about the impeccable condition of the property with brand new carpeting, recently refinished flooring and a fresh coat of neutral paint. Good interior staging is going a long way to make the home show the best that it possibly can. The homes that look right are being purchased, those that have a couple of faults here and there, major or minor, are being overlooked and sitting on the market unsold. This is exactly what happens when there is an oversupply and it is a Buyers Market.
The houses that are Priced Right are also getting a lot of attention. These are the homes that are sometimes called ‘short sales,’ or ‘quick sales.’ They might be properties where a seller has to sell because of a job transfer or a job loss. They could be properties in pre-foreclosure where the owner is distressed to get out of the property before they must turn the keys over to the bank. It could be a corporate-owned home, either by a bank, or a corporation who moved their transferee. These are some of the most motivated sellers on the block. Or, it could be the builder who is willing to ‘wheel and deal’ and give away the spec home at an unbelievably low price, just to keep their sub’s paid, and able to work on that next home.
I recently met an owner being transferred who could not sell his home which was priced under the market at $325,000 when all of the comparable homes would support a value of over $350,000. He told me the feedback received was that people are choosing new construction of more expensive homes of homes originally priced $400,000 to $450,000 that builders were selling for $350,000 with the discounts and concessions. It remains a difficult resale market in areas where sellers are competing with builders.
With residential mortgage rates at favorable rates, most lenders have tightened their lending practices, making it more difficult for even the most qualified buyers to purchase a home. It appears to be more difficult to get a loan right now than in the recent past.
Many of the “fence-sitters” continue to sit back and wait for the market to hit rock-bottom, or wait for that home that either Looks Right or is Priced Right.