We can all agree that Real Estate has been bonkers the last couple of years and no one expected the Covid to affect all aspects of our business to this degree. There have been some great benefits to cycle out of these wild times and our company has definitely benefited from the wave but we have also witnessed our share of Scary and Concerning happenings that not only don’t make sense but make us afraid to think of what repercussions may come with them. So below is my list and hopefully it doesn’t scare you too bad. Boo!
- Appraisals – Remember when appraisals mattered? We used that valuation as a guideline to making a wise purchase and the banks used that guideline as a way to determine a low risk smart investment. Well adios appraisals in 2020 and 2021. It seems like we all just wait for the appraisal to come back so we can move forward with our own opinions and throw caution to the wind whether or not its really a good investment. Obviously there are a million sides to this and we can all rationalize (because we do) why the appraisal is garbage but in the last two years I have never seen so many buyers put so little weight on what the appraisers are saying about the price of a property. Will the appraisals ever matter again?
- Land Prices – Yeah lack of activity and high construction costs had little to no affect on the pricing of land from the sellers perspective. Like you see when an investor buys a building, they can pay up because interest rates are low and they can overcome the increase in expenses. The land values just stayed the same and paid no mind to affordability or the ability for a development to pencil and make a profit for a developer. The angst that goes along with selling a property did not increase at all and it seems as though the majority of land owners would rather wait for the demand to build as apposed to unloading their property. I have listed ground that the seller after 2 years of no activity just increased the list price. Makes complete sense in my world now and I don’t see this trending down any time soon. As a matter of fact the motivation to make a deal is sometimes lower then ever and just sitting tight can be the most profitable move yet.
- 1031 motivator – You ever have the conversation with a seller that has a huge upside on a potential sale because of their very low basis about what a 1031 exchange currently looks like? Its a real bummer. They spent 20 years flipping through properties and not taking out their profits and buying a few blocks up the road as a way to avoid a tax liability and then they get to 2020 and that back end just disappeared. Before they could find a nice deal on something that they could see coming to fruition in their lifetime but today we are talking about their grandkids cashing out. Selling something they bought right and buying at the top just doesn’t work with many investors from a cash basis so to many of them the thought of selling is going backwards and that is scary for sure. In the end its probably just a nice time to watch things happen around you.
So whether you are a buyer or a seller or a broker you have witnessed some scary things the last couple of years and maybe spooked out of the game even. In all reality its been alot of fun as its a great challenge to work through and as I work with developers they really do earn their stripes as they continue to take some pretty scary risks. Working with sellers they are making smart slow moves and very intentional about the deal they make. And working with other brokers, we seem to still get to the finish line without too many apologies.
- Happy Halloween
Curt has been in the Indianapolis Real Estate business for nearly 15 years and spent his first years learning all aspects of commercial management and brokerage. He has had great success in managing existing commercial projects and new retail and office developments. Curt specializes in building owner representation and purchases in the Westfield Indiana market as well throughout the Indianapolis Metro area. Curt is passionate about growing the local Westfield community and in his free time volunteers with Student Impact of Westfield and raising 2 children with his wife Jennifer.