Feeding Frenzy – richmondmagazine.com

Houses selling for hundreds of thousands over asking price, offers that include rare bottles of bourbon and luxury vacations, and deals made sight unseen with no inspection. Richmond’s real estate rumors are true.

“Five years ago, I would have called these offers crazy, but now they’re standard,” says Graham Rashkind, managing broker and owner of Rashkind Saunders & Co. “We had a house in Glen Allen that had literally caught fire, sat open to the elements for more than a year, and still received 10 cash offers and $75,000 over the asking price. It blew our minds.”

Low inventory, low interest rates, a growing population and pent-up buyer demand have created an extreme seller’s market. Intense buyer competition and a shorter time on the market are contributing to the frenzy.

According to the Richmond Association of Realtors, homes are selling about twice as fast as they have in the past. The average number of days on the market for homes in Central Virginia was just 18 in 2021 compared to 42 in 2017.

“Typically we’re seeing a home hit the market on a Thursday, all offers have to be in by Sunday and are answered by Monday,” Rashkind says. “That’s an unfortunate cycle. Out-of-towners can’t get here, and if you’re looking at five homes that weekend, you have to choose just one to make an offer. You’re rushed to make a decision on a major financial investment.”

Rashkind says he booked the last showing of a Stratford Hills home for a client at 7 pm, and offers were due by 8 pm

“When we pulled up, it looked like a scene from ‘The Walking Dead,’ ” he recalls. “People were roaming the streets outside the home writing in notepads and taking photos, just trying to get as much information as they could before the deadline. The house ended up getting 61 offers — the most I’ve competed with — and unfortunately, my client didn’t get the house.”

On the flip side, one of Rashkind’s listings in Westover Hills just had 96 showings and went for 45% over asking price. The sellers were able to secure a nice nest egg. They’ll spend time at their river house while renting an apartment in town to be close to grandchildren.

Offers that are over asking price make it harder for younger and less-wealthy buyers to compete. Ernie Dettbarn, associate broker with Shaheen, Ruth, Martin & Fonville, says the market is especially frustrating for first-time homebuyers. “They’re having a difficult time competing not only against one another but with investors, as well as buyers seeking to downsize. In addition to a low inventory of homes, Richmond is seeing historically high rental rates and a rental shortage.”

In a seller’s market, it’s not just about the highest price, but also about making the seller feel comfortable about the deal going through.

Dettbarn says many buyers are making cash offers to eliminate the financial contingency. A buyer may still opt to finance at closing, but they must prove they have the assets to back their offer.

“I advise buyers to have their finances in order if they plan to purchase with a mortgage loan and explore the possibility of getting assistance from a relative so they can make a cash offer,” Dettbarn says. “But no matter what, buyers should always stay within their price point.”

Home prices have been a moving target, making budgeting difficult. And this isn’t just a Richmond problem. According to the National Association of Realtors, home prices were up almost 15% from 2020 to 2021, increasing the median sales price to $375,300. Central Virginia numbers aren’t far off. Prices rose 12.5% ​​in the same period to a median sales price of $315,000. In addition, the average home sold in Central Virginia last year went for 102% over asking price.

A broker associate with Compass, Jenny Maraghy ​​has been in real estate for 30 years and has never seen anything like it.

“Prices are getting so high, we’re starting to see homes not appraise,” Maraghy ​​warns. “If an offer is submitted for $1 million, but [the house] appraises for $850,000, the buyer has to make up the difference.”

Other than making cash offers, buyers are accommodating sellers as much as possible. Some Richmond buyers are tempting sellers with lavish gifts on top of an already strong offer. “But at the end of the day, it’s really about the net value of the offer at closing,” Rashkind says.

Many buyers are closing quickly, then allowing the sellers to remain in the home rent-free until they’re ready to move out. Though not widely advised, many buyers are also waiving inspections.

“The hard truth is that buyers must be willing to put some work into homes they purchase,” Dettbarn says. “That has always been true of homeownership, but it’s especially true now. In today’s market, sellers simply don’t have to present their properties in perfect condition.”

Real estate has always been about location, but buyers may have to be flexible and broaden their search, even if their hearts are set on desirable areas like Richmond’s Museum District, neighborhoods around Libbie and Grove avenues, or popular subdivisions in Glen Allen.

“Some buyers simply can’t afford the areas where they want to live, and they face a tough decision,” Dettbarn says.

In April, the interest rate exceeded 5% for the first time in more than 10 years, according to Freddie Mac. Compared to 3% interest rates last year, this means a $400,000 home now costs $400 more a month to finance.

“I wish I had a crystal ball to see when things might level out,” Maraghy ​​says. “I’ve never seen a time when buyers and sellers needed an agent more. There are just so many pieces that need to be discussed. Being a buyer right now takes fortitude.”

Rashkind believes this kind of market won’t go on forever. While he’s happy for his clients selling a house, he feels for those struggling to buy. “I really prefer a more balanced market,” he says. “When buyers and sellers can negotiate, both sides can win.”

Recently Sold

Photos courtesy of CVRMLS

I Survived Richmond’s Real Estate Hellscape

Take an evening walk down Floyd Avenue in the Fan, and you’re likely to see me lounging on my front porch, a glass of wine in hand. I may look peaceful, but the truth is, I’m shellshocked from Richmond’s wild real estate market — and it’s going to take some time to recover.

My husband and I have been buying, renovating and selling homes since we moved to Richmond in 2014. Yet when we felt the familiar urge to move after three years in our Far West End home, our instincts screamed at us to wait. But we’d always wanted to live in the Fan, and as we watched prices rise, we knew we had to pounce before we were priced out.

Luckily, we had an ace up our sleeves. Our most recent renovation project was a home in Cape Charles, which we were able to sell, off-market, for nearly four times what we paid. That meant we had some ammunition — the ability to make a solid cash offer.

After selling the Cape Charles house, we jumped into the early spring market and quickly learned we weren’t the only cash buyers out there. Our real estate agent informed us that there was a big contingent relocating from cities like DC, Philadelphia and New York — buyers who thought an $800,000 town house was a bargain. Time and time again, we found ourselves beat out by buyers with more aggressive offers.

And then we found “the one” — the house that ticked every single box. We decided to offer everything we had, despite the fact that it was significantly more than the asking price.

We weren’t surprised when we were outbid once again — by someone willing to go more than $200,000 over the asking price. What did surprise us? The sellers chose our offer instead, based on a heartfelt letter we’d submitted with it.

After settling into our Fan home, we put our suburban house on the market — and found ourselves with a newfound sense of compassion for the brave, desperate buyers. —Erica Jackson Curran

Full House

After months of playing the real estate market, a big gamble pays off

If you’ve ever bought a house, you know that feeling of deliberating numbers, making your offer and then waiting. At any minute, the phone will ring, delivering a yes, a no or a counteroffer. Some people find that thrilling, but I don’t have the stomach for high-stakes poker, and that’s exactly what today’s real estate market feels like.

Our family moved from Louisiana to Richmond last year. We found a rental house near Tuckahoe Elementary School and assumed we’d buy a home nearby before our six-month lease was up. We quickly realized that finding a rental had been pure luck, and that buying a house had even worse odds. Weeks went by with nothing on the market, and when a house finally popped up, it was gone in a day.

Over several months, we looked at a dozen houses, each with its own imperfections and an inflated price. I started to feel desperate enough to take anything, convincing myself that a funky ’50s layout would only add character.

For one showing, we were up against 50 prospective buyers, and we each got a 30-minute appointment to assess our largest investment. We submitted an offer, thinking it was a sure bet, but we fell short. A month later, the same thing happened: a great house, multiple offers and another losing hand.

One Friday, my son had a minor medical procedure. My husband was scrolling through his phone at the hospital when he saw a promising listing flagged “Coming Soon.” He wanted to make an offer — from the waiting room. We called our agent with our conditions, putting all our cards on the table. Later that night, the sellers accepted. We had found a house! We just hadn’t actually seen it yet.

Today, we’re settled in our new home, in a neighborhood where our boys can bike to school and to 7-Eleven. We’re happy to be out of the game, and we feel good about our investment. Now if only we had stock in Slurpees… —Laura Anders Lee

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