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Submitting Creative Bids During the Spring Market Frenzy

It’s that time of year again. The spring market is in full swing and crowds of buyers are fighting over their dream house—or at least the closest thing to it, considering this year’s nationwide inventory shortage isn’t leaving many options. So, what does that mean? For the most part, higher prices, more competition and a whole lot of bids.

Listings in good condition tend to get multiple offers this time of year, and buyers are putting forth their strongest submissions—cash offers, over-asking, fast closings, no contingencies, etc. But creativity is the name of the game in this year’s competitive market. Buyers are inspired to win over the seller’s emotional side. Here are the latest home-buying trends for beating out the competition in this swarming spring market:

Love Letters

While they’ve been around for a while, they’re getting a lot more popular, being used by buyers as a last-ditch effort to win via the seller’s emotional attachment to the home. Most letters talk about favorite design choices the seller incorporated, plans to raise the family and proclamations that the home is “the one” after a long and tough home search.

With so many letters delivered, buyers can’t risk being disingenuous. Oversharing or being too emotional can backfire. It’s best to get an idea of what type of person the seller is—emotional or data-driven—and what type of activities and hobbies they have in common before typing up or writing a letter.

If the sellers lived in the home for years and brought up their family in it, buyers can have their own kids craft letters on colorful paper with sloppy crayon-writing to tie in that connection. Or if the seller is an animal lover, buyers can talk about how the yard is a perfect place for their dog to run around. Including photos with the letter can make the process even more personal.

Letters usually tell the seller that the buyer is serious and willing to take care of the home. But some sellers may only focus on the numbers and terms. It’s a toss-up, but it doesn’t hurt to try.

Buyer-Crafted Videos

These are a little newer, emerging after YouTube’s digital push into vlogging, or video blogging. While they can come off as cheesy, they are a little more personal than handwritten letters, because sellers will feel like the potential buyer is talking directly to them.

And if buyers are feeling gutsy, and the seller has a more creative personality, this can be the perfect place to showcase unique talents while sharing their love for the home. Can the buyer sing? A quirky, original song about the home may just be the winning ticket. Does the buyer play the ukulele? It could be a fun twist that breaks the ice. Or maybe just a sit-down video with the buyers—talking directly into the camera to make it more conversational—is the winning choice.

According to REALTOR® Magazine, a couple recently won a bid on their dream home by making a music video to “Our House,” which just so happened to be the song the sellers sang to each other when they first lit the fireplace in their home. The connection instantly won the sellers over, beating out another offer that was $20,000 over the buyers’ submission.

The options are endless and it’s more important than ever to stand apart from the crowd.


4 Steps to Take Before a Home Showing

Buyers want to know exactly what they’re getting when purchasing a home. As it’s a major investment, all potential homebuyers will want to inspect your entire property while keeping an eye out for any signs of damage. What can you do to make sure your home is ready for public scrutiny? Here’s what you need to know:

Thoroughly Clean the Home

Before allowing anyone into your home, you should have it thoroughly cleaned. This means dusting, vacuuming and taking out the trash. It may also mean taking steps to remove smoke or other odors from the air. If walls or other surfaces have mold on them, be sure to clean them prior to an open house. In addition to increasing the odds that someone makes an offer, taking the time to eliminate mold will go a long way toward reducing the risk of potential buyers getting sick.

Take Time to Stage the Home

Prospective buyers want to get an idea as to how a given space within a home can be used. For instance, they may want to see if there’s enough room for their bed in the master bedroom or if there’s enough room for the couch in the living room. If you have a finished attic or basement, be sure to showcase it as a space a buyer can make good use of.

Remove Potentially Offensive Items

When you show a house, you want to present a neutral look to potential buyers. This may mean getting rid of posters that make political or religious references. You may also want to hide items with sports logos, especially if you live in an area where rivalries are huge. By doing so, you will allow those who visit your home to imagine themselves living in the space without having anything to cloud their vision.

Make Necessary Repairs Before an Open House

If you’re planning on making repairs prior to selling the home, do them before allowing anyone to see the space. For instance, you may want to repair the leaking water heater or replace shingles that have fallen off the roof as soon as possible. You should also make sure the garage door opens and closes properly and that all of the lights work.

If you want to sell your home in a timely manner, you must know how to prepare the space for public viewing. Making repairs, removing offensive items and properly staging the property may all increase the odds of selling your home.

Another one that is important is to make sure your house smells good!

By taking these steps before a showing, you may very well increase a buyer’s confidence that the home is worth putting an offer on.  Good Luck!

By: Hannah Whittenly; RISMedia’s Housecall

How a merger could generate tremors across the Triangle housing market

Lennar and Cal Atlantic merge. Cal Atlantic was created just recently when Standard Pacific and Ryland Homes merged. Buyers will have very few choices when it come to new homes in the Triangle market. In theory, these mega-companies can be more efficient and deliver more to consumers. But I’m not sure it works that way. And all the new houses will look pretty much the same!

When Lennar Carolinas bought a sprawling family farm west of Apex last April, real estate analysts called the acquisition historic. The buy – $25.7 million for 225 acres – was one of the largest single-day land take-downs ever seen in the Triangle.

Trish Hanchette, Lennar’s Raleigh division president at the time, likened the deal to adding an aircraft carrier to the company’s fleet of properties in the Triangle. The publicly traded company, ranked as the second biggest homebuilder in the country, had mostly been buying and developing battleship-sized parcels since the recession, Hanchette said. But in the wake of the Smith Farms move, Lennar would be on the lookout for bigger deals.

But now, Lennar itself is bigger – much bigger.

On Feb. 12, the company’s shareholders approved the $9.3 billion acquisition of CalAtlantic, a behemoth itself, ranked fourth in the nation among homebuilders. The deal makes the new merged company the largest homebuilder in the country based on revenue and catapults the firm into the top market share slot in 16 U.S. metro areas – including the Triangle. In the Raleigh-Durham area, Lennar and CalAtlantic combined for 1,180 closed homes last year, according to data from Metrostudy. No other company surpassed 1,000.

But even with its new muscle, Lennar faces a challenging task in the Triangle, where finding developable land in prime locations is difficult and competition is fierce. Lennar executives insist the merger will give the company the financial heft needed to pursue large projects such as Smith Farms, while cutting overhead costs – positioning it to dominate markets.

Lennar executives have been tight-lipped about the acquisition, declining to comment by email or return phone calls.

But people within the industry are paying close attention to see just how far the effects might ripple throughout the region’s red-hot residential real estate market – where demand is high, but inventory is low. At stake are the prices of labor and material throughout the residential construction industry, bottom lines for homebuilders and, potentially, home prices for consumers.

While the merger has some concerned about further escalation in land costs, other analysts and industry professionals are skeptical that combining forces will be enough for Lennar and CalAtlantic to exert their will in the Triangle market.

 “I think they’re going to do fine here,” Royal Oaks Building Group founder Rich Van Tassel says. “But locally there are just so many national builders that are out there banging around.”

Rising costs, less land

The troubles facing homebuilders in the Triangle are not necessarily new or unique. Across the country, homebuilding companies are coping with ongoing labor shortages and increasing construction costs. The result has been a continued slowdown in new home construction, compared to historical the 1960s to the turn of the millennia, quarterly new home starts in the U.S. hovered around 1.5 million nationwide, according to Redfin, a residential real estate website. The post-recession trend has been upward, but production still lags. In the last quarter of 2017, new home starts ticked in at just over 1.25 million, a number that takes into account seasonal variations in homebuilding.

Along with the labor and construction cost issues, the slowdown is compounded by access to land. “Especially as building in urban areas has become more desirable, it’s harder to find the land at a good price and good financing,” says Taylor Marr, Redfin’s senior economist.

Developers in the Triangle have cited similar concerns, saying the scarcity and higher cost of land has affected everything from rents at new apartment complexes to home prices.

In theory, consolidation should help boost new home construction by addressing some of the underlying obstacles homebuilders are facing, economists say. “It might be a little bit easier to share labor or get better deals on prices if you’re bigger,” Marr says.

That could mean lowered costs for materials or labor, or even better financing deals.

There are seven publicly traded firms among the top 10 companies building subdivisions in the region. Like many of the tech companies and startups that make their home in the Triangle, the homebuilders come because of strong job and population growth, buoyed by the long-term security of the universities, the health care system and the state capital, says Moss Withers, a broker with Raleigh’s NAI Carolantic Realty office who specializes in large land sales.

“That’s what grooms a solid base,” Withers says. “They don’t want to take risks. You go to places outside this market, there are more obstacles for success. The market fluctuates a lot more. It’s less of a leap for a homebuilder to come in and be successful here.”

More players means a homebuilding landscape that is more diffuse, and this holds true in the Triangle.

The top 25 builders here accounted for 6,961 new home sales in 2017, which was 68 percent of the entire market, according to data from Metrostudy.  The crowded and relatively diluted pool of competitors means there are more companies in the hunt for land and top talent. On the whole, some in the industry believe the crowded landscape makes it more difficult for a single company to dominate.

More money, fewer problems

Consolidation could prove helpful in the new company’s ability to follow through on large land deals. Lennar will have deeper pockets than the competition, and that can translate into more aggressive pursuit after prime parcels. “It gives them power to get control of more deals,” Withers says.

But achieving the kind of growth goals that the new company will likely set for itself could prove difficult. Several sources in the homebuilding industry say the company wants to build around 1,700 homes this year, a number that would be astronomical for the Triangle. Even surpassing the 1,000-home threshold is no easy task.

Van Tassel has been running Royal Oaks since 2000, and he only remembers a handful of instances in which a company broke 1,000 homes in a year. “It’s a difficult thing,” he says. “Everybody wants to do it, but there’s just so many of us.”

The anti-growth sentiment cropping up in corners of the Triangle where homebuilders are most active only makes this more difficult. Lennar and CalAtlantic have a cluster of developments in western Wake County, from Cary to Holly Springs. Pulte Group, another national builder that was the leading firm in the Triangle before the merger, also has a large presence in that area.olly Springs, for example, community concerns about large projects have led town officials to urge developers to consider traffic as a top priority when pitching new development. In nearby Apex, a petition demanding the town to save its trees from new development gained more than 2,100 signatures in January.

Not the last

Lennar executives have touted the merger as a deal that will save on costs and propel it into the future.

In an earnings call after the merger, executives predicted savings of at least $75 million in the 2018 fiscal year, and $250 million in the following year. A majority of the savings would come from lower construction costs, they said. Fifty percent of existing CalAtlantic development will be rebranded to Lennar. The merged company plans to convert many of the communities to Lennar’s “Everything’s Included” package, which is a more uniform home style that company officials say will reduce construction costs and time.

Lennar and CalAtlantic were not the first to attempt to gain efficiencies in the homebuilding pipeline by combining forces, and they won’t be the last. CalAtlantic itself is the result of a merger of two homebuilders, Standard Pacific Homes and Ryland Homes, that took place in 2015. Pulte Group went through a similar acquisition in 2009, when it acquired Centex Corporation.

Last year, Dan Ryan Builders, ranked third in the Triangle, sold a major equity stake to a Japanese homebuilding firm.

While the newly merged companies talk about cost savings, having larger companies in the land rush could create more price pressure on the parcels that are available.

“With this and any other merger or consolidation, it’s going to create strong demand for a limited supply of lots,” says Brant Chesson, president of Homes by Dickerson.

The effect could be prices that rise even higher, and that is an issue that has become a problem in the Triangle, Chesson says.

“I think our market has to really think about affordability for buyers,” Chesson adds. “For labor and materials and the land costs, we’ve been able to raise the price and pass it on to the buyer, and I think we’re getting to a point where we can’t.”