Typically, buyers include a home inspection contingency in their purchase offer that allows them to ask the sellers for repairs and get out of the contract if the seller refuses. The seller can respond in a number of ways.
They can readily agree to fix the problem, no matter how expensive.
They can agree to fix any problem that’s a safety or potential legal issue, such as mold or radon remediation, but decline minor repairs such as filling in and painting over picture hanger holes in the wall.
They can refuse to fix anything, but risk losing the buyer. For safety or code issues, they’ll have to declare the problem on subsequent seller’s disclosures, which could impact the home’s value to future buyers.
They can offer to lower the price of the home to cover the cost of the repair for the buyer, or offer a closing credit to the buyer to pay for the repair without lowering the price of the home. That way the buyer can complete the repair to their liking.
They can ask the buyer to meet them halfway, such as paying more for the home if the seller repairs something major, or replaces the roof.
They can ask the buyer to waive additional repair requests if the seller will fix the worst or most expensive problem.
Sellers should know that FHA, VA and other government-guaranteed loans have stricter requirements for home safety, and that some repairs are mandatory for the buyer’s loan to close.
‘Is There a Real Estate Bubble?’ and Other Questions to Consider When Buying or Selling in 2021
Of all the real estate terms referenced in the media, “bubble” might be the most overused. Over the past few months, the word has seen a resurgence, with prospective buyers and sellers worrying that the white-hot markets of 2020 will lead to a proverbial burst in 2021.
Real estate experts in the U.S. and abroad, however, are cautiously optimistic, and they don’t believe the activity of this past year has inflated a “bubble” to be concerned over.
“A real estate ‘bubble’ is characterized and fueled by speculation, and that is not what we are experiencing now,” says Scott Bradley, President, Berkshire Hathaway HomeServices Hawai’i Realty. “The unprecedented market strength we are seeing today is driven by simple economic fundamentals: supply, demand, and the cost and availability of money. Current historically low interest rates are a prime catalyst driving sales. An imbalance of supply and demand is further fueling a hot market. There are 50% fewer homes on the market right now than there were a year ago, but demand for homes is strong.”
That demand means even tougher competition for the buyer pool, but with more and more projected sellers deciding to list this year, emerging inventory could lead to market shifts. “I would encourage everyone to recognize that this might be a very hot year in terms of real estate,” says Chris Stuart, CEO of Berkshire Hathaway HomeServices. “But I’d hate for anyone to be on the sidelines and miss out on an opportunity either on the buying or selling side of the transaction.”
To better understand those opportunities across the globe, we spoke with real estate insiders about their forecasts for the upcoming year. Their insights serve as proof points of real estate’s continued resilience and reliability—even during uncertain times.
Q: The headlines last year screamed that people were fleeing cities. Is there any evidence that urban areas are regaining strength now that vaccine rollouts are underway and COVID-19 restrictions are being lifted?
Diane Glass, CEO, Berkshire Hathaway HomeServices Chicago: January 2021 was an exceptionally strong month for property sales in center city Chicago. There was a 15.2% increase in sales compared with January 2020, which had been a very strong month. The median sales price increased 15.9%, even as the inventory of homes for sale was below last year. New construction is in demand, but supply is limited by the cost of materials and availability of buildable lots. We are seeing a resurgence of interest across the board in the city—from luxury downtown high-rises to starter condos in residential neighborhoods.
Q: Low interest rates are tempting those looking to purchase investment properties. What factors should they consider to get the best deal and return on investment?
Vince Leisey, CEO and Network Agent, Berkshire Hathaway HomeServices Ambassador Real Estate: I would recommend investors look at houses that have been on the market for a week versus those that have been on the market for a day and have 30-40 offers. Look at something that maybe needs a little work done, which investors are more willing to do. You’ll have less competition from first-time home buyers—who are often searching in the same price range but are less willing to do that sort of renovation work. In Omaha, Nebraska, rents have gone up pretty much every year. The problem is, rents aren’t going up as fast as purchase prices. That being said, in markets like Omaha, because there are low interest rates right now, I still believe there are plenty of houses out there that investors can buy and achieve positive cash flow on.
Q: What about those looking to invest in short-term holiday rentals abroad? Is now a good time to buy?
Dounia Fadi, CEO, Berkshire Hathaway HomeServices Gulf Properties: In Dubai, the trend is purchasing homes for short-term rentals more so than long-term ones, because the returns are much higher. The demand was very low for these types of rentals because of the pandemic, but recently, from November through January, there has been an uptick in demand. Ultimately, there will always be demand for holiday rentals here because you have sun 365 days a year. The one thing investors of this type of property need to remember is just to be patient—there will be demand in the holiday home sector that will increase even more as travel restrictions are lifted. However, buying right now is still a good idea, because prices are at their best. I’m seeing a recovery in prices every month. They are increasing.
Q: What is the biggest concern you have for the market as you look ahead in 2021?
Carsten Heinrich, CEO, Berkshire Hathaway HomeServices Rubina Real Estate: My biggest concern this year is that supply will not be able to keep up with the changes in the market. For example, in Berlin, prior to the pandemic, our most popular listings were micro-apartments in the city center. That changed a lot as people decided they’d like bigger apartments or houses to accommodate our changed lifestyle. Berlin is a city of singles and young couples who are now looking to buy, whereas before they were renting. For those buyers, I would recommend they pay attention to rising interest rates, which will impact their monthly charges. I’d also advise that they really take a look at the purchase and the long term. Is this a place they’ll want to be in a few years, and, if not, does it make financial sense to buy right now?READ THE REPORT
Decorating colors come and go, but few have retreated from the mainstream for as long as yellow. The Pantone Color Institute’s selection of “Illuminating,” a cheerful light yellow, paired with the calming “Ultimate Gray” for its 2021 Color(s) of the Year, may make yellow popular again. Pantone describes Illuminating and Ultimate Gray as “two independent colors that highlight how different elements come together to support one another.” The pairing conjures strength and positivity that things will get better. Grays have been popular in home décor for some time, supplanting beige as the go-to neutral, but the exuberance and optimism of yellow is a welcome breath of fresh air.ColorPsychologymeaning.com explains that yellow is the brightest color the human eye can see. Yellow is believed to enhance creativity and to stimulate the brain to think and learn. It’s stimulating and energizing, with happy connotations like daffodils, lemonade, bananas, and children’s colorful drawings of big yellow smiling suns. ColorCode.com says that people with yellow personalities are fun-loving, enthusiastic, optimistic, charismatic, spontaneous, and sociable.Whether you believe color psychology is a real science or pseudo-science, it’s certainly true that yellow can add a lively, attention-getting touch to decorating. But, like red, orange, neon, or acidic colors, a little yellow goes a long way and is best utilized for smaller accessories and furniture, or to complement a focal point like a piece of art that may include a little yellow. Consider yellow for throw pillows, flowers, or occasional chairs to brighten your home.
