Last week I had the opportunity to be part of a select group of real estate agents participating in a Q&A with Jason Oppenheim, star of the Netflix show Selling Sunset and broker at Los Angeles-based The Oppenheim Group.
If you’ve watched the show, you know Oppenheim and his agents assist West Coast clients transact multi-million dollar home purchases and sales (with a little drama mixed in for good measure and good ratings).
But his insights, advice, and predictions about the real estate market are just as applicable to our market here in the DC and Northern Virginia area.
Here are 4 takeaways:
1) Sellers: Don’t chase down the market
Oppenheim, who stated from the get-go that he is not one to sugar-coat his opinions, either with colleagues or clients, acknowledged that the real estate market is slowing down.
He shared advice he gave a current client who originally tried to sell his home for $8 million with another agent, but after it sat on the market without selling, he hired Oppenheim, who agreed to list the home but only if the seller agreed to a lower $5.995 million list price.
“We’ve got two choices here: we chase the market down like probably most sellers are going to do or we get in front of the market,” Jason said he advised the seller. “And if you chase it down, you’re just going to be reducing [the price of] the property 2 or 3 times. We’re not going to get any value from these reductions because the reduction will be too late.”
He continued, “Nobody cares about you going from $5.995 million to $5.8 [million] or $5.75 [million] because it’ll be on the market for 2 months and as you guys all know, when properties sit on the market, I tell all my clients, we lose all the leverage. I mean the only leverage you have is in the first month, maybe two months. No [buyer] is going to walk in with a full-price offer three months down the road and no one’s going to fall for your $150,000 price reduction,” he said.
The takeaway is to avoid overpricing your home, which often results in multiple price reductions. If those reductions aren’t significant (his $150,000 reduction would be more like a reduction of $10,000 or $20,000 for an average-priced home in the DC Metro area market), sellers lose leverage.
“We need to do a half-million-dollar price reduction,” he said he told his client, “and get our home sold before all these others homes sell.”
2) Sellers: Don’t wait to get your home on the market
While no one has a crystal ball, Oppenheim predicted the market isn’t going to get any more favorable for sellers than it is now.
“The main thing is, the market is very likely not going to be as good in six months as it is now, so it makes absolutely no sense to not sell your house now compared to six months from now,” he said.
With rising interest rates and fears swirling about the economy and global events, many industry experts, like Oppenheim, predict the window of opportunity for sellers to have the upper hand in the real estate market is narrowing.
3) Buyers: Don’t expect a crash like we saw a decade ago
Oppenheim predicts we’re nearing an equilibrium between a buyers' market and a sellers' market, but doesn’t expect the past to come back to haunt us.
“By no means do I think there’s going to be a buyers’ market in the sense that we had in 2010, 2011, 2012 where it was truly sellers needing to get out, properties sitting on the market for months, if not years, and buyers being able to lob in low offers. I don’t think we’re going to be there,” he said.
4) Buyers: Even the uber-wealthy are taking advantage of the current historically low interest rates
Though the thought of locking in a mortgage interest rate around 6% is hard to digest for many buyers who started their home search when rates were in the threes, today’s rates are still considered to be historically low.
And Oppenheim said even the wealthiest of his super-wealthy clientele is opting for a mortgage instead of paying all cash.
“They’re still taking advantage of low interest rates, still getting a loan,” he shared. “I’m in a $35 million deal right now and he has all the cash in the world and he’s getting a loan because he can still get a good interest rate and they can collateralize their own assets.”
Oppenheim also noted that he secures mortgages for all his personal real estate purchases rather than paying cash.
From Sunset Blvd. to the I-95 corridor, the real estate market is shifting. Oppenheim noted that real estate is nuanced, and each market is different. But he acknowledged the next couple years are going to look different.
Perhaps one might say we’re seeing the sun set on the frenzied seller’s market we’ve grown accustomed to.
Greer Uptegraft is a Northern-Virginia based Realtor licensed in Virginia and the District of Columbia. All content reflects her own views and should not constitute advice about any specific property or real estate transaction. Many thanks to event host Draper + Kramer Mortgage.