5 Terrifying New Truths About DC Real Estate
Things are constantly changing in DC Real Estate, or the DMV if you prefer that phrase which encompasses Maryland and Northern Virginia as well. Now that we’re in the middle of the 2023 spring real estate market in DC, new behaviors have surfaced that you need to know about if you want to be successful in your search for a new home.
1. Who You Hire Counts More than Ever
I know that there are a lot of agents who do the least amount of work possible and still enjoy a successful career. It’s maddening for the rest of us who love this business to witness. Now more than ever, watch who you hire.
I was at a pre-inspection with clients recently. This has been the norm in our market for close to 5 years. Buyers will do inspections prior to writing an offer so that they can eliminate the inspection contingency entirely. We were in the middle of a pre-inspection and a woman knocked on the door and said, “We’re here.” I encouraged her to come into the house.
When she saw the inspector she said, “I thought offers were due Tuesday.” I said they are, but we were doing the pre-inspection. She asked what I was talking about, so I explained it to her. It’s so common here that I felt like it was a joke. Then she said she didn’t normally work in this area, she tended to work just in Anne Arundel and Charles Counties which are east of DC. She said she was only helping this young couple because it was a referral from a good friend.
This agent and her clients could not have been more opposite. I felt bad for them. Their agent is working in a market she knows nothing about, and this isn’t going to serve them well at all. To confirm my suspicions, she bid them farewell into the house and plopped down in a chair in the living room, trying to chat up the inspector.
She not only knows nothing about the market where her clients are purchasing, but she basically just unlocks doors. She didn’t even walk through the home with her clients, talking to them about what they saw, where potential issues could be and explaining the various systems of the home.
Don’t hire agents outside there areas you want to be in. Those people will never get you the best home for the best price.
I got a call from a prospective client who had been watching my YouTube videos. We chatted about their search and they were exploring several areas around DC. I told them how and where to drive around, what restaurants to eat at in each of the areas, but suffice it to say, they were looking in Reston which is 45 minutes west of DC, Frederick, MD which is an hour north of DC and Annapolis which is an hour east of DC.
They decided on Annapolis. I was sad to let them go, but this was the right thing for them. I don’t know Annapolis but I know an agent who does. I introduced them to her and she took over and got them a house within a few weeks. The house was $800,000. Would I have loved that commission? Absolutely. Was it the right thing to do to pass them to someone who serve them much better than I could? Absolutely. Her connections got them into the best house for them – something I never could have done.
2. Off-Market Sales are a Rarity
Riddle me this. You’re a seller in a seller’s market. In fact, this is as seller’s market of a seller’s market we’ve ever been in. Are you going to contact an agent to help you sell your house, then agree to sell it to one of your agent’s clients?
Would you agree to only show your house, which will be hotly desired by dozens of buyers to just one or two people and let one of them buy it? The market speaks, and unless you go to the open market, you will never know how much money your house would have sold for.
Do not fall for the trap where an agent convinces you they are tapped into the off-market. This is a marketing ploy to get clients. There’s a well-known brokerage here which tells you after you perform a search on their website that they have “1549 other properties that you can have access to if you sign up with one of their agents.”
THIS. IS. A. LIE! There are maybe a few dozen properties at any given time which are being prepared for market within various brokerages and many of those sellers won’t sell off-market because they know exactly how strong the market is for their home. When clients receive email and postcards alluding to the “off-market,” I will pull up the sales for the past year. In many cases there’s maybe just one house that sold off-market.
3. Don’t Be Overconfident in Cash.
Cash is now the Baron. What does that mean? Well, everyone always said “Cash is King,” and that is not the case anymore. Cash is more like the Earl or the Baron, but not King anymore. Most offers with mortgages are fully non-contingent anyway and typically the buyers know to put high deposits at risk. This means that cash offers are no longer this incredible frontrunner.
Don’t get it wrong, cash offers are still appealing, but any buyer who has a half decent lender knows that their blessing for pre-approval is pretty solid. There’s also been a long standing belief that if you have cash you can write a lower offer. That’s not true anymore. I’ve seen several clients who bid lower because they thought cash would win over a higher offer with a mortgage, and they learned the hard way. Don’t be overconfident in cash.
4. Young Buyers are Flush With Money
Speaking of cash, we’re seeing a lot more cash buyers in this market. What’s mind-blowing is the age of these cash buyers. A 30 year old with $1.5M in cash is feeling like the norm right now in the DC Area. No longer can the buyer in their 40’s or 50’s look down on their competition with the misguided premise that they have more money. The amount of buyers in their 20’s and 30’s with access to high amounts of cash is unprecedented.
What’s happening? In some cases, I suspect parents are fronting the money so their kids can lock down competitive homes and go to closing. Then some of them probably get a mortgage and pay mom and dad back. But other buyers? They’ve invested wisely and have amassed a solid nest egg.
5. High Days on Market Doesn’t Mean the Listing is Stale
Has the home you’re considering been on the market for 3 or 4 months? Think you have time to take your weekend trip and tour it on Monday. Don’t do it. Don’t dismiss a high number of days on market as a sign that you have time. Just because it’s been listed, withdrawn and relisted several times doesn’t mean that after a year on the market they are desperate to sell or that you’re going to be the only offer. You’re not the only one with this idea. We’ve seen other buyers show up and bid the same time you are after a property has sat for more than a year.
If you’re working with me, we will discuss these things over and over so that you don’t forget, and any new behaviors or trends that crop up, you will be the first to know about those as well.