Hi, everybody. Hi, Eric. Hi, welcome to Let’s Get Real About Real Estate. I’m Charlotte, I’m a realtor in Idaho and Washington and this is Eric Leigh with Guaranteed Rate. How are you doing?
Eric Leigh:
Good, how is it going, Charlotte? Good to see you again.
Charlotte Jean:
You too, it’s nice to be not hosting, but doing these lives again. It’s getting back into the groove and sharing good information.
Eric Leigh:
Couldn’t agree more, yeah. I’m excited for what we’ve got to share today because as you and I were talking about in the green room before we went live, there’s a lot of, let’s just use that word again, mythconceptions, out there about what’s actually going on in housing with buyers that we’re going to debunk today.
Charlotte Jean:
Yes, yes. We’re going to share the National Association of Realtors Profile of Home Buyers and Sellers for 2021. You can see my screen, right?
Eric Leigh:
Yes, looks good.
Charlotte Jean:
Okay, let’s go through and talk about the very first thing, which was buyers typically searched for 8 weeks before they found a home and they looked at 8 homes before they found a home that they went under contract on, which I think is very interesting because if you compare it to both 2020, that was very similar, it was 8 weeks and 9 homes, but in 2019 it was actually 10 weeks and 9 homes, so things are going under contract faster. I had some thoughts about that, but what are your thoughts, Eric?
Eric Leigh:
My thoughts are even though 2019 was still a pretty strong seller’s market, when we talk about number of months of inventory and all that stuff, it was still a seller’s market and a pretty strong seller’s market, but it became an even stronger seller’s market in 2020 and then in 2021 the inventory levels have not changed anything for the better. As those numbers don’t get better, the intensity of trying to purchase something, I think it just feeds into buyer’s psyche, like it’s tough out there and you have to be aggressive if you’re wanting to pick up a home in today’s market.
Charlotte Jean:
Exactly, exactly and we’ll cover another factor of statistics a little bit later on about buyers purchasing for their first home versus their forever home, so people are probably in that frenzy thinking, I just want to be able to get in a home and build that equity, I’m going to just have this first home versus it being the forever home. I think that that’s interesting.
Eric Leigh:
Yep.
Charlotte Jean:
All right, let’s talk about some lending stuff. The typical down-payment for first-time home buyers was 7% and that’s not significantly different from 2019 or 2020. I was doing some additional research for that, another video that I’m doing, which is The Myths About Down-Payments, where people still think that you need to have 20% in order to get a loan on a home. In reality, first-time home buyers who put down less than 20% down is actually 71% of first-time home buyers put less than 20% down. That’s a significant amount of buyers. In fact, 60% of those actually had 6% or less down. I think it’s really important and you can talk more to this, that we let buyers understand that that is a myth. You can get a contract or a loan on a home for way less than 20%.
Eric Leigh:
Yeah, yeah. and loan officers love real estate agents like you who are trumpeting this out on social media and your YouTube video channel because it is the biggest mythconception that we deal with. I don’t even know where it comes from, but this thought there, well, I can’t buy a house unless I have 20% down and I don’t know if that comes from parents or their parents’ parents generation because that’s what it used to be, but here in 2021 and now 2022, the thing that people need to realize is that every state as well has some form of a down payment assistance program through the state housing agency. Whether or not you qualify for that, that’s for loan officers like me to figure out and help you understand, but they exist, they have never not existed, charlotte. They’ve always been there and if that’s going to be the main reason that you say, I’m not going to be able to buy a home, is you self select out of that because you don’t have your 20%, you need to talk to a lender quickly, because it’s just not the case.
Charlotte Jean:
You know, every potential buyer that I talk to, that is the one piece of advice that I will share immediately, is if you have any thoughts of, I wish I could own a home, have that conversation with a lender because you don’t know what programs are out there until you have that conversation. You don’t know what your financial status or what you can afford until you have that conversation, so instead of doing what you said, which is self-selecting yourself out of that, have those conversations. It’s super important.
Eric Leigh:
Right? Yeah, it’s 100% and again, there is way more out there than you realize because you’re not the loan professional, you don’t do it every day. Call your loan officer and ask what options there are and feel like the sky’s the limit, just ask.
Charlotte Jean:
Exactly, exactly. The other part about down payment is for repeat buyers. It was typically about 17%, which makes sense, because often they’re using the equity from their first home to use as a down payment.
Eric Leigh:
And we know what home values have done over the last three to four years.
Charlotte Jean:
Exactly, all right. Overall, buyers expect to live in their home for 12 years and 18% said that they were never moving. That’s similar in 2020 and 2019, but it’s actually less. The median was 15 years and 21% said that they were never moving in 2020 and 15 years and 20% in 2019, so it’s definitely a lot less. I think this is going back to those buyers that want to just get in to build that equity. They’re buying their right now home or the home that will work for them for the next one, two years, three years, versus buying their forever home and holding out for their dream home, because they are building a lot of equity in the last couple years.
Eric Leigh:
Yeah. The other thing that’s interesting too, is that ability to sell and buy in the same market when prices are so high. Well, sure, you’re going to do amazing on the sales side because of all of the equity you’ve accumulated, but where are you going to go? If you’re going to step up and prices are continue to increase like that, it may not make sense to step up and maybe it does make sense to stay, or stay and renovate and add onto your house, extra square footage. There’s a lot of people that request renovation loans, so it makes sense to me that number’s still pretty high.
Charlotte Jean:
Yeah, all right. In this survey, sellers typically lived in their home for 8 years before selling and in the past let’s say 2019 and 2020, that was 10 years, so they’re definitely taking advantage of this increased appreciation, aggressive appreciation to purchase a home that is a better fit for them. I just think that’s interesting.
Eric Leigh:
Yep, nothing to add, all makes sense.
Charlotte Jean:
Okay, all right. Now we’re going to get into how sellers sold their home, 90% of sellers worked with a real estate agent, which makes sense, 7% of sellers sold as a, for sale by owner, that’s what FSBO means and less than 1% of sellers sold via an iBuyer. I wanted to go a little bit into the for sale by owner aspect of that because a lot of people don’t realize that most, 51%, of for sale by owners actually knew the buyer of the home. Typically, that’s going to be their selling to another family member.
Eric Leigh:
Yeah, I’ve got a secret stat I’ll add that’s not in your survey. In my personal career, every single for sale by owner that I have had somebody come to me and say, hey, I want to do this because we’ve got somebody, so and so, it’s either a very, very close friend or family 100% of the time, not 57% of the time. To add further strength to your scenario, it just doesn’t work that way. There’s something that they already know and they’ve already got it figured out.
Charlotte Jean:
Exactly, exactly. We’re talking about pricing, a for sale by owner home, the median home sales price was $260,000 and again, these are national numbers so it’s going to be rent locally and if you sell it with an as an agent assisted, it’s $318,000, so it’s $78,000 difference. I you are selling to another family member, you’re probably not going to care as much, like you said, you have a deal figured out already. Whereas, if you’re a for sale by owner that’s just trying to save some money, you’re probably losing more money than you think you are.
Eric Leigh:
Every time, I mean, we just can’t say enough about that. Those numbers are really clear, you’re not going to do as well as you would if a realtor is open market, all of the potential sellers seeing all of the houses, yeah, exactly. That’s a lot of money, $78,000.
Charlotte Jean:
Yeah, exactly, it is. When I saw that, I was like, holy moly, that’s crazy.
Eric Leigh:
Yeah, that’s a big difference.
Charlotte Jean:
Let’s go back to how sellers sold their house. I wanted to talk really quickly about the iBuyer of less than 1%. There’s a lot of agents that don’t like iBuyer programs, they don’t think that they are good for sellers and I just want to put out there that the iBuyers have a purpose. They are not telling sellers, we can buy your home for the most money, you’re going to get top market value for your home if you let us buy it. They are promoting convenience. You don’t have to have people come through your home for showings, you don’t have to do any repairs. It’s easy, peasy, fast, generally and so they do have a purpose, right?
Eric Leigh:
Right, right. Here’s the other thing, I don’t think a lot of people realize this when they want to sell and then maybe sell and buy, or whatever it is, there’s this misconception out there that’s selling a house is easy. Oh, it’s just easy, I’ll throw it out there on the market or have my agent list it, I’ll have 20 offers, it’s piece of cake, but there’s probably going to be a home inspection that your buyer gets. Every single one that I ever see for my buyers, it’s evidence that the HVAC system has been serviced in the last 12 months and of course they don’t have that, because they probably didn’t do it, but that’s the easiest one.
Now you might have to go do some repairs or you might have to get this done, or maybe there’s a little bit of moisture that’s showing up in the basement. There are things that will always come out of the woodwork that you, as the seller are going to be asked to fix, so selling a house just isn’t this cake walk, put your house on the MLS and just sell it and you’re done and walk away. It’s not that easy, there’s always stuff that comes up and by the way, packing all your crap and moving, that’s not as easy, either. Charlotte Jean:
Yes and dealing with being in there when they’re showing, having to have it be show ready all the time-
Eric Leigh:
All the time.
Charlotte Jean:
All the time, that’s a lot.
Eric Leigh:
Not even going into the point if you have children or pets too, because you’ve got to gather them up every time there’s a showing.
Charlotte Jean:
Right, so while doing that with agent assisted marketing and stuff like that, you’re definitely going to get more dollar value back, but there are certain situations where an iBuyer program makes sense and I actually do work with some iBuyer programs, so if that is you and you have questions, please reach out. I can absolutely help.
Eric Leigh:
Yeah, super convenient, that’s for sure.
Charlotte Jean:
Yeah. Anything else to add? I mean, we went through a lot of data.
Eric Leigh:
We did, yeah. I was just thinking I’m just mind blown there by all this stuff, but it’s really interesting and I think, if anything, this just represents that a lot of people feel like things are so much different than they were before the pandemic. Gosh, there’s a lot of statistics that you just provided that show God, it’s pretty much not different.
Charlotte Jean:
Very similar.
Eric Leigh:
It’s the same, almost, on some of those things, you take 1% or whatever, so yeah, very interesting. Gosh, good data, good stuff.
Charlotte Jean:
Yeah, I think that to your point, that goes back to you can’t always believe what you read in the media because a lot of it’s click bait articles and the headline reads completely incorrect information just to get you to click on it and then even in the article, it’s not factual information.
Eric Leigh:
Let’s coin a new phrase right now, Charlotte.
Charlotte Jean:
Okay.
Eric Leigh:
The more you think things change, the more they stay the same.
Charlotte Jean:
Exactly, exactly.
Eric Leigh:
Oh, I love it. Well, this was good today. Great stuff, thanks for bringing all that great data to it.
Charlotte Jean:
Thank you, I know I went super fast. I get really excited about the data obviously, because I’m like, blah.
Eric Leigh:
Well, I love working with you, I’m a data guy, too.
Charlotte Jean:
Awesome.
Eric Leigh:
Make sure that you all reach out to us ff you have any questions about this or anything that’s real estate related. Charlotte, obviously the professional, can help you to buy or sell your home and me, the loan professional, that can help you get a loan if you need that financing or just want to talk options. We’re always here to help and when this is done, we will make sure that we have our contact information in the comments down below.
Charlotte Jean:
Absolutely, thanks everybody for coming.
Eric Leigh:
Thanks everybody, good to see you, Charlotte.
Charlotte Jean:
You too, bye.
Eric Leigh:
Bye.