I have been selling real estate for a long time. I have seen recessions, stock market crashes, speculation and finance driven real estate crashes. I’ve seen booms and busts, sold new tract homes and resold custom estates. I however, wouldn’t dare to say that I’ve seen it all. My father-in-law Mark Bader, sold new homes for the better part of 50 years and he would say, “When you stop learning in this business, you’re dead.” He was so right and if there was ever a week that proved this was true, it’s this week. I most certainly haven’t seen it all. So, what happened?
Well for one thing, this damn pandemic happened. I, like every Realtor in America, was in a free fall without a net in spring 2020; a most uncertain time. Since then, we have seen an epic boom in real estate activity and pricing. Fast forward to this fall and I can honestly say 2021 is going to be my best year ever [Contact Tim Here]. But this week in particular demonstrated that the pandemic and its effects are still coming home to roost and the ramifications are unclear. Today for example, Case-Shiller reports that nationwide real estate prices are up nearly 20% year over year and up 25% in places like Phoenix, Seattle, and San Diego. Are you kidding me? If you’ve read any of my articles in the past you know that I attribute the boom to a confluence of events not the least of which is dramatic under building, Millennials starting household formation and the premium placed on space as a result of, you guessed it, the pandemic. But 20%? To channel Yoda, “Problematic this is…”
This week also brought me two cancellations. One of those has been off market and under contract 3 separate times for a total of 9, yes 9 weeks. It has fallen out 3 times as a result of Covid. The first was a professional musician getting what’s called a “12 Month Bank Statement Loan.” This is a loan that tracks cash flow via bank statements and tax returns rather than relying on monthly W2 income. This is particularly useful for the self employed who have irregular income streams, perfect for this buyer. But the mortgage lender changed the terms of the loan mid-stream and told the borrower they needed to track 24 months bank statements rather than 12. As you can imagine, this composer with their new 2021 TV contract was like me in spring of 2020; free falling with no income and no way to make any either. So by going away from summer 2020 to summer 2021 statements to summer 2019 to summer 2021, the borrower showed months with no money coming in due to the pandemic [Search for Listings Here]. Deal falls apart. Being this is a seller’s market, we immediately receive another offer. This buyer 2 is all cash – dad buyer for Millennial daughter – and a 15-day close. On day 10 dad contracts Covid and goes into ICU. Thank God he going to survive but they had to cancel. Once again back on the market and I once again sell right away. This buyer #3 is two weeks into escrow when I hear they report feeling unwell so their repair request was tardy. We finally get their repair request and sit down to negotiate the repairs when I am informed that this whole family is not just unwell but has contracted Covid and they have to cancel. So again, I must ask, are you kidding me?
As if this weren’t crazy enough, another transaction also struggling with irregular financing finally gets loan approval only to cancel, this being a $2.1 transaction. The buyer just walks from the deal last minute and a $63,000 earnest money deposit without explanation. What? Are you kidding me? In my 31 years of selling real estate, I have never had that happen [Follow Us on Facebook]. And while all this is happening, I have one buyer who wrote $272,000 over ask to win the property of their dreams, another who wrote over ask and we’re waiting to hear, a third who simply cannot find a home to buy despite going up from $1.2M in price range to $1.7M and I just put up for sale a new listing where the seller last minute raised their price to way over what I’d recommended and I already have 4 offers with two over ask! Repeat after me: Are you kidding me? And to think, I actually thought the market might be normalizing just a couple weeks ago…
So, what’s it like selling real estate in the middle of a pandemic? Nothing if not incomprehensible.