Jim Valentine: Today’s Temporal and Monetary Variables

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Jim Valentine on real estate

Real estate decisions include many elements, but those that have the most influence on the transaction are usually time and money. Both are usually predictable and tradeable given their stability. Not anymore.
The trials and tribulations of ultra-low interest rates causing rates to rise, COVID-19 impacting the market in myriad ways, and demand outpacing supply in many segments of real estate have created many challenges. uncertainty about the ability to operate in a timely manner. manner in a contract.
The monetary component is easy to tackle. Prices are trading, but with rising interest rates will they fall? Some are, but were they too high to begin with or are we really seeing a price drop? Time will tell on all, but there is still high demand in Northern Nevada for limited inventory. Prices are falling, but not like they did when we entered the 2008 recession. Rates are still good even though they are higher than they were a few months ago. Negotiate your price based on your understanding of the market and what it offers for your established wants and needs.
The timing of trades became very erratic. The slowdown in the volume of refinances and sales has allowed appraisers and inspectors to get bogged down in their work. The rise in valuation prices that prevailed in the days of rampant refinancing and rampant selling has disappeared. It was a sad testament to greed, as some appraisers charged $1,400-$1,800 for a $450-$500 job and still didn’t deliver much faster. They now return them “in a timely manner”. Inspectors stayed the course during times of crisis, but were booked longer than usual. The lengthy valuation and inspection times extended escrows by at least two weeks at that time and gave the “as is” buyer a significant advantage. It’s nice to have a flatter market these days.
A major time factor is now in the realm of repairs. Many offers are written “as is” to be competitive in the marketplace, but if major repair items come to light during inspections involving safety or expensive items, they may be brought to the table to facilitate a close.
Negotiating the cost of these repairs is usually quite quick for several reasons. First, the buyer is as surprised as the buyer and knows they have to do something so the buyer can get what they bargained for. Then there is the time factor. How long will it take to find a new buyer after the repairs are done versus working with the existing buyer and closing late, but sooner than with a new buyer? Either party can pay, split the cost, or cancel. Some sort of compromise is usually found between the parties.
The problem with repairs today is finding someone to do the job in a timely manner. Many repairs are handyman items, but handymen are all busy. If you need a contractor, i.e. plumbing, electrical, roofing, etc., good luck! They are all busy with little time for estimates and repairs. If you can’t agree or your lender won’t allow a hold, you may need to extend the closing time for repairs to be completed. This often results in a credit in escrow and a closing without repair… if authorized by the lender.
All parties are sensitive to the timing of escrow and the costs associated with it. You can guess at some of the variables these days, but if circumstances don’t allow you to stay within the parameters established by the offer, support a fair resolution for all parties as you move forward together towards your collective goal. .the escrow closing. Nowadays, many elements related to the financial and temporal components of the transaction are beyond the control of one or other of the parties. Have some understanding.
You never know which part will be negatively affected by these uncertain times. Be understanding of your counterpart when something happens, because the next one could affect you and you will want his understanding.
When it comes to choosing professionals to help you with your real estate needs… experience is priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. [email protected]
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