What is 2025 going to look like?
Let me start this column off by saying “Happy New Year!” as well as expressing some sincere appreciation.
Today marks the completion of the eighth year of me writing weekly to you and is the 415th column I’ve had the privilege of having published. That is a long time and a lot of columns. And without you being my readers, without your feedback and encouragement, I would not have kept going for this long. So, from the bottom of my heart, I want to say thank you. You keep me going and I am grateful for you.
Now then, 2025 is here, and everyone is curious about what the new year will bring and how it will affect the real estate market now that a new administration is coming. Since I don’t have a crystal ball to tell the future, all I can do is tell you what we are experiencing right now.
In the column titled “Holiday Housing,” I wrote to you about a decision we had to make on a newly finished flip property. Our conundrum was we had completed a house in Chatsworth one week before Christmas. And we were trying to decide to list it immediately or wait until after the holidays to avoid added days-on-market when no one was shopping for homes.
Well, we decided to go ahead and list instead of waiting, and not only did we get immediate activity, but we also got offers…plural. Now before you get all excited about a bidding war, let me explain what happened.
The first offer was not a full list price offer. Instead, it was $10k less than what we listed. Now this came as a surprise to me for a couple of reasons. The first was we listed lower than I expected. When we went under contract to buy the project at the beginning of October, my agent told me the house should list for resale at around $230,000, but that number was reduced to $220,000 by the time we got ready to list in December. I assumed with that lower figure, we would be competitively priced and not be getting offers for a discount.
Another reason the below list offer was odd to me was this was a brand-new listing with a house that was in great condition. The buyers here were trying to get a 4.5 percent discount two days after we listed. In addition, they also asked for $10k in seller paid closing costs. That would be 4.75 percent of the new offered price, which is crazy to me. I don’t think buyers and agents consider how much it costs a seller to sell. With 6 percent in agent commissions and that above mentioned amount of closing costs, that’s nearly 11% off the purchase price it costs a seller to sell their house.
Needless to say, we explained that situation to the other agent and declined that offer. The next day we got a slightly over list price offer. In this scenario the buyer needed plenty of closing costs and they added that amount into the sales price to cover things. And since it was not an extreme amount they added, I believe the appraisal will come back good, and we took that offer.
What we saw on this house was interesting; we listed lower than we thought, we got multiple offers, including over list price like in the past, and a shorter time on market. It was less than a week which was great for winter. But we also saw a buyer shopping for a discount, which is not something I have seen in years.
Now what does that mean for 2025? Who knows. But from my standpoint it looks like this year is going to be a mixed bag when it comes to list prices and offers. Right now, prices seem to be plateauing, and possibly dipping backwards slightly. What that means for you is that you need to avoid skinny deals and do more due diligence when trying to figure what the after-repair value is going to be.
That also means you are going to need to be better at knowing your rehab numbers. This will apply to both flippers and wholesalers because now you won’t be able to count on appreciation to cover you if you underestimate how much a rehab is going to cost — and they are costing a lot more now than they used to.
On this house, we bought it right. Losing $10k off the sales price from the get-go stung a little, but it did not break the deal. That’s because we added a buffer when figuring our purchase offer. Next, we rehabbed this one well and came in under budget, which was amazing. So that covered some of that $10k for us.
The long and the short here is no one knows what 2025 will bring. And what you should be doing is nothing new, just do smart deals. Stay away from thin ones and make sure you have enough room for when things go wrong. And make sure you lose the mentality that you can just list higher because you messed up, because you won’t be able to; it will cost you more money in holding costs and interest by listing too high. So don’t do that.
The old saying goes, “You will find what you are looking for.” And I believe that holds true for 2025. My hope is that you will make this year your best year and find your way to the path of financial freedom. Now get out there, meet with sellers, find out how you can solve their property problems, and make good offers. And remember, how 2025 looks is up to you.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.