Abigail Jennings on the Charlotte real estate market
Matthew Blake, senior real estate reporter at HousingWire, spoke with Abigail Jennings, president of the brokerage Lake Norman Realty near Charlotte, North Carolina, for today’s episode of HousingWire Daily.
In the Charlotte market, Jennings said there is more housing demand than ever and there are a record number of people interested in becoming real estate agents. She also said she is seeing confrontations between agents and homebuilders over agent commissions.
“This is very new,” Jennings said. “We’ve never seen anything quite like this.”
The episode is the latest in Blake’s Houses in Motion miniseries, which is taking a look at the biggest issues in residential real estate nationally.
Here is a small preview of the interview, which has been lightly edited for length and clarity:
Matthew Blake: I think 2 million people in the U.S. are real estate agents, 1.4 million belong to the National Association of Realtors. Why are so many people real estate agents and why is this trend accelerating right now?
Abigail Jennings: I think it’s definitely COVID related. Our whole economic structure of people getting out of certain careers, and deciding that they don’t want to do that anymore and looking for something else. Also, because of COVID, a lot of these classes that you used to have to be in person to take, they’re all online. So people that have time on their hands, sitting at home. I’m not saying it’s easy to pass the test. North Carolina does have a pretty hard test.
So that does help make sure we have qualified people out there. But getting the license isn’t the only step to being successful in real estate.
…You need to know the ins and outs of the area. Like with the Lake Norman market, waterfront properties have nuances that you aren’t taught when you get your license. You’re not taught — what’s the water level supposed to be? Who owns that dock?
HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Houses in Motion is hosted by Matthew Blake and produced by Alcynna Lloyd and Elissa Branch. If you have a pitch or an inquiry relating to podcasts, you can reach our team at firstname.lastname@example.org
Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:
Matthew Blake: Hello, and welcome to “Houses in Motion,” part of “HousingWire Daily,” where we discuss the biggest issues in real estate. I’m Matthew Blake, Senior Real Estate Reporter with HousingWire. Joining me today is Abigail Jennings of Lake Norman Realty. Lake Norman is about 20 miles north of Charlotte. And like much of the country, especially the south, property values have soared in the area. In Morrisville, just east of the lake, values climbed 21% year over year to $360,000 in July of this year, according to Zillow. The area’s also seen some influx of new construction. But as we will talk too, with Abigail, that has created as much frustration as it has opportunity for real estate agents.
Few people in the industry are as qualified, I think, to provide context as Abigail. In 1998, she took over as President of Lake Norman Realty, a firm started by her father, James Jennings, in 1978. She has lived through numerous ups and downs in the industry, including the mid-aughts’ spike in demand and subsequent market crash. Abigail, welcome to the show.
Abigail Jennings: Thank you so much for having me.
Matthew Blake: So, let’s talk about where you live, Lake Norman. What is that like? And what is the housing market like there?
Abigail Jennings: Well, Lake Norman is a beautiful place to be in our country. As you mentioned, we’re just north of Charlotte, which makes us very desirable because a lot of people are coming to Charlotte and coming to North Carolina, in general. And they often don’t know about Lake Norman until they get here. But it’s got something for everyone. It’s 512 miles of shoreline, about 33,000 acres of lake. And surrounding the lake are multiple towns that all have very unique and individual styles. You mentioned Morrisville, and that is one of them. It does have waterfront…large bit of waterfronts on the lake, as well as shifts to a very historic town. So, many of these communities have that because the lake is a manmade lake. So they flooded the Catawba River to make the lake. So, these towns, many of them existed prior to the lake. But in the past 40 years or so, have all grown because of Charlotte, and now interstate connectivity that didn’t exist prior. And each are kind of developing in their own style.
Matthew Blake: And you mentioned that people are coming to North Carolina, coming to the Charlotte area. Where are people coming from?
Abigail Jennings: They are coming from all over. There just is a lot of interstate movement. But from outside of North Carolina, the top one is actually Virginia, followed closely by Florida, South Carolina, New York, and Georgia. And then California, which I really thought was… We see a lot of Californians coming this way. …was going to be higher, and it may be in 2021. I look forward to see what the final numbers are. So these were in…as of a 2019 report, so I could not find an actual 2020 one at the moment. But those are the ones we typically see.
Matthew Blake: And the clients that you speak with, why do they say they’re moving to your area?
Abigail Jennings: Change of pace, change of lifestyle, sometimes it’s relocation, it’s a job. A lot of relocation business in our area. You know, wanting space, wanting lower property taxes. We see that shock a lot, especially from our friends coming from the northeast, cannot believe that our property taxes are much lower than what they’re used to up there. Those are some of the main reasons. Family is a big one. So you get one member of a family that comes to our area, and then the family members come for a visit. And the next thing you know, we got a whole lot of people. You know, it’s like a permanent vacation for a lot of people to get to be on that water, and come home after work, and have the beautiful views, and scenery, and everything it has to offer. Which is more than just the lake as well. As I mentioned, those towns and the rural areas still exist. So you can still get land. And compared to some of the real estate prices in the rest of the country, it is affordable. Although as you mentioned, prices are definitely going up and have seen quite a rise in their value.
Matthew Blake: Yeah, what have you been seeing sort of since the pandemic started that maybe you weren’t seeing before?
Abigail Jennings: Oh… Well, I mean, the multiple offer situation, which everybody, I think, in the country is seeing a good bit of. That, you know, began immediately after some areas in 2020, which were more shut down due to the pandemic. As soon as those got opened up, it was like the floodgates opened and it hasn’t stopped. We are seeing multiple offer situations in all price ranges. Unlike the time, you know, prior to the recession, we saw them in kind of limited price ranges. But now it’s in every price range. From the ones you’d expect in the lower ranges, to very uber luxury price ranges. A lot of multiple offers, a lot of… We have here what is called a due diligence fee. It’s money paid up front that goes to the seller, and is non-refundable. We are seeing due diligence fees that are pretty mind boggling. I believe we had one just on not even a very expensive property that was over 300,000 due diligence, just because these people wanted this house. So that’s quite a commitment prior to closing on a house.
Matthew Blake: Wow. And do you see… I mean, that’s crazy. Do you see those kind of examples that you’re giving, but also just sort of more consistently, the multiple offers? Is that as strong today as it was three or four months ago? Or do you see that dropping at all?
Abigail Jennings: We are not seeing that drop in our area. You know, the limited inventory is the biggest problem. And there have been little dips. It just goes hand in hand with inventory. So, you know, the demand is still huge. There’s just not enough in our area and not enough product for everybody. So we are not seeing a decline for lack of interest. It may be that we have buyers that are having to sit and wait right now because there’s just not things that are available to them.
Matthew Blake: And for a brokerage, for yourself and for your agents, is this a good time then or is this a stressful time? What are the pressures and opportunities right now for Lake Norman Realty because of this crazy market?
Abigail Jennings: Well, it’s a good time to be in real estate, I would say, yes. But I do think it depends on the broker, and on, you know, a lot of things. We are seeing a huge uptick in folks entering this career as a second career, and making a change. And I think it is very difficult. It’s possible, but I want to say that we’ve definitely had some newer associates doing very well. But it’s hard to get into this market and not have experience and not have a client base that you can rely on. You know, many of our associates that have been here for a long time and do have that client base built up are doing extremely well. There’s not enough hours in the day for them to be helping their clients right now. Because they are, they’re just working all the time, pretty much, helping clients find what they need. So it is a good time. But you do need to have resources, and be connected, and have good training. If you’re thinking of just popping in the business because it looks so good… A lot of times, unfortunately, people think this is an easy business, and we get paid lots of money to be in this business. So, why not? Let’s get a license and make lots of money. And it doesn’t actually work quite like that.
Matthew Blake: Yeah. Actually, if you could just elaborate a little more on that, because I think that’s really interesting. Because I’ve been looking at how, I think, like, 1 in 100 people, and I’m just remembering this off the top of my head, but 1 in 100 people in the country are real estate agents. Like, I think about 2 million people in the U.S. are real estate agents, 1.4 million belong to NAR. Why are so many people real estate agents? And why is this trend even accelerating right now, would you say?
Abigail Jennings: Well, I think it’s because of… I think definitely it’s COVID related, and making a change, you know, in our whole economic structure of people getting out of certain careers, and deciding that they don’t want to do that anymore, and looking for something else. Also, because of COVID, a lot of these classes that you used to have to be in person to take, they’re all online. So people that have time on their hands sitting at home, it’s really easy to take the classes and all. I’m not saying it’s easy to pass the test, it is a… North Carolina does have a pretty good, hard test. So that does, you know, help to make sure we have qualified people out there. But getting the license isn’t the only step to being successful in real estate. Which a lot of, I think, people don’t understand. They think that I’m going to work hard, study hard, get my license, and then I’m going to get paid. But that’s just the beginning.
So, to be successful, really, in real estate, you’ve got to have the next step after you get your license, which is very good training and good support. These are things that our company also does provide to our brokers. And, you know, their success rate, I think, proves that it works. So, the ins and the outs of the area, especially in our area, with Lake Norman market. Waterfront properties have nuances that aren’t taught when you get your license. You’re not taught, you know, where’s the water level supposed to be? Who owns that dock? You know, some water type related things that you learn from experience and good training.
Matthew Blake: And so what is it like now at Lake Norman Realty, because I cover real estate nationally. And when I think of, like, the North Carolina market, I think of…I think Allen Tate is down there maybe, and I know EXP has made inroads there. And you see all of these brokerages with a national profile and you see the splits that they’re offering agents. What kind of pressure’s that specifically put on your commission splits at Lake Norman, but just more generally, what kind of competition are you seeing right now?
Abigail Jennings: It’s fierce competition, is definitely out there. Everybody’s got their brand and their model. They’re working. Allen Tate’s a great company. We’re members of leading real estate companies in the world, and they’re one of our member companies as well. Follow that same full service model in a lot of ways, although we are definitely more of the boutique-sized company compared to someone like them, as we really do focus on the Lake Norman market. So that’s one differentiator. Regarding EXP, completely different model than us. And that works for some people. And so, you know, I don’t have anything disparaging to say there. It’s just different. So, we are a very…we’re completely full service, provide a lot to our brokers, provide a lot to our clients. And there’s brokers that see that value, and there are definitely clients that see that value. So, I think there’s a place for all of those different models.
Matthew Blake: Yeah. I mean, has it been harder to sort of keep agents in place because of some of these new competitors?
Abigail Jennings: You know, whenever there’s a new shiny object on the horizon, there’s always going to be some movement around. Knock on wood, we are thankfully very stable and growing. So, what we’re doing, we are going to keep on doing. And I think, you know, our success is proof that it’s still very valuable.
Matthew Blake: And one other sort of national trend, I just want to see how it’s playing out in your neck of the woods is, there’s a lot of brokerages right now that are getting into mortgage. I mean, for many decades brokerages have been into mortgage, but now it seems, more than ever, the brokerages are, like, the overhead, the commissions we are paying agents. The only way we can reliably become profitable is to do mortgage, maybe to also do title. What is Lake Norman’s stance on mortgage?
Abigail Jennings: I’m going to take it bigger than just mortgage. So, I do think that having diverse services and covering anything that a client needs in real estate is very important to do. Actually, the way we were able to successfully survive and really do pretty well on getting out of the recession was because we did have property management rentals. We also do commercial, our relocation business. We did take a step into title many years back. I found that was not the right fit for us. I learned a lot about the title business, but decided to focus on the real estate. Mortgage, we are working on… We’ve had a good relationship with local…a mortgage company. We are getting ready to be doing something a little different on the mortgage front. So I would love to talk to you more about that in a few months.
Matthew Blake: One thing… Obviously, maybe you’re not ready to talk about what you’re specifically doing. But what do you think of this joint venture model where sort of there’s a mortgage company, there’s a brokerage?
Abigail Jennings: Yes. So we have been a part of something similar to that in the past. I think that it can be tricky. And so I’m very cautious to do things that I really believe are the best for the client, and not just about how to, you know, pad the profit and loss statement. So, wanting to be very careful there. Agents are in control of the transaction. And so they have relationships. And so, we have never forced our agents to use any of our in-house providers. And that has been a good thing for us. You know, we want to have people that they choose on their own to go after and not mandated. So, sometimes, I think, when you have those joint venture programs, that can be a little bit of a problem, because I think brokers don’t want to be told who to use. If they see that what you’re offering is the best choice, it makes it much easier. So, getting those things set up correctly on the front end, I think, is really important to do. But we have, you know… Had a joint venture titled that is the type of program we did have many years ago for that. What we’re about to do in mortgages is a little bit different than the joint venture program.
Matthew Blake: I mean, do you feel at this point that it’s pretty impossible for a residential brokerage to just sell resident homes? Or what do you think about that?
Abigail Jennings: I think it’s possible. I think it all depends on the size and what you’re wanting to do. You know, there’s… I don’t know the stats on it, but as you mentioned, all those licensees out there. I mean, there’s a lot of licensees out there that aren’t affiliated with a company at all, or maybe it’s just one or two people. And they may be just as happy as they can be, just, you know, going out there and doing a few deals, and getting paid, and they may be just fine. So, you know, I don’t know. If that’s what they’re after, then that could work for them. For our model and our size, I just think the old adage, you know, don’t put all your eggs in one basket, makes a whole lot of sense. So, to have ourselves covered in multiple ways, because there are…definitely, there’s pressures on commissions, not just from brokers wanting to get paid more, but sellers who want to pay less. So to fill the gap in what other, you know, products that we can offer that help the bottom line and provide great service, then those are things that we definitely want to include in our offerings.
Matthew Blake: So, one thing that we’ve talked about in the past is, because of the market, because there are multiple offers, there’s obviously a huge demand for new homes. And so, I guess, first off, what is going on with homebuilding in the Lake Norman area? Are people able to get permits to build? You know, are homes coming onto the market? Is there, you know, supply line crunches that are preventing that from happening? I guess, the first question, yeah, is just, are homes being built?
Abigail Jennings: Yes. Homes are being built, but they also can’t keep up. Everything that you just mentioned is affecting the new construction industry. Supply chain issues have really been a problem. Rising material costs, some of those that we see are leveling out. But I believe, in my opinion, what has happened with new construction is, just like everybody else, nobody knew what we were expecting when we had the first COVID shut down in early 2020. And, you know, covering wages, covering salaries, continuing to pay bills for materials when you don’t know what is around the corner, I understand why a lot of builders might have kind of stopped and pulled back a little bit. But when they did that, that break in the cycle, I think, is what has caused a lot of these rising costs, a lot of the supply chain issues, and they have gotten us where we are now, which is that they cannot keep up.
So, there’s a whole lot of them. Yes. Let’s see. So we’re down, new construction sales, year to date, very small, 1.4% down in the Lake Norman region. The Charlotte metro region is actually up 5%. I know that that little dip right there for new construction down is completely because of them not being able to keep up. It’s not because of lack of demand, because they’re selling very quickly.
Matthew Blake: Yeah. And what kind of opportunities are real estate agents seeing right now from that new construction? Are agents able to work with home builders or what are you seeing?
Abigail Jennings: That’s an expected. Unfortunately, we have seen some builders choosing to try to do their best to literally cut out the broker in the transaction, which I definitely think is a disservice to the consumer, to not have representation. I did pull my associates, wanting to get their most recent information dealing with homebuilders, who’s still working nicely with us and who is not. And sadly, there’s quite a few that really, have changed their tune. I’ve asked, you know, my brokers, said, “How are you going to feel about this when the market changes, and they’re coming back and begging?” Which, you know, previously, our new construction builders really did treat us well, and want us to know their product, paid fair commissions. And a lot of that has changed. That’s not to say all of them.
So, you know, D.R. Horton, Blu Homes, Adams Homes, all are still doing very nicely. We’ve had some reports, though, of actually, builders offering the house for less, if they will not bring a broker and aren’t represented by an agent. Which is really unfortunate because that client doesn’t understand. They don’t know the difference. They don’t know what they’re potentially missing out on. And our value to that client is very real. I mean, I’ve personally been in transactions with new construction builders for friends that have gone to a new community without me. And after I look over their information, realize they’re leaving money on the table on various points. And so, unfortunately, with that situation, those customers aren’t going to know what they missed out on, probably until they go to resale, and then they’ll probably learn, or other things that they’re missing out on by not being represented. You know, we had one, Stanley Martin homes, completely cutting brokers out of the picture. Ryan Homes going with flat fees of very low percentages.
And yes, I think this is going to affect them when that market does turn around. Because as we know, in real estate, it’s cyclical, things change. Although we’re in a moment right now that history has never seen before in real estate, at least in our area, things will come back around. Things will circle back around and steady out. And so that’ll be interesting to see what happens when that time comes.
Matthew Blake: Yeah. I mean, there’s a lot going on here, I think. Ryan Homes, Stanley Martin Homes, like, I haven’t talked to those builders specifically. But when I have talked to builders who are not paying agents right now, they basically tell me, “Look, like, people are almost lining around the block to buy these homes, and we’re already paying extra for wood, for electrical wire, for other supplies. You know, the last thing we need to worry about right now is paying an extra $12,000 for an agent.” So I guess, what would you tell a builder… Or maybe more relevant, like, what would you tell a customer if the customer is like, “Look, like, I know I want to buy this home. I’m on a waiting list for 20 other homes. Why do I need you to tell me that I can buy this home?” Like, what is the value… In this specific market right now, what is the value of a buyer’s agent?
Abigail Jennings: I think just thoroughly understand the contracts, thoroughly understand the inspection process. Things happen with new construction that people don’t understand. Just because you see, you know, plat, doesn’t mean that that’s your land, unless you have a survey. There are definitely issues that buyers need to be aware of that they won’t be aware…they will not be brought to light most likely unless they’re extremely savvy and are asking those questions themselves or not. I do want to say that we still assist our clients no matter what the commission offer is, or lack thereof. So we are not putting it out there and saying, “If you go see this X, Y, Z builder, we’re not going to help you.” So we are there for our clients no matter what. It’s just unfortunate that we don’t get paid sometimes in this situation. But we’re doing all right, and we do put our clients first. So that’s the main point.
Matthew Blake: And in terms of sort of, like, what will happen when the cycle goes down, I mean, has this happened before? Have you seen, like, maybe in the boom times, the mid 2000s, like, home builders turning their back on agents and then losing business or is this kind of new, what’s happening right now?
Abigail Jennings: This is very new. We have never seen anything quite like this. But like I said, we’ve never had a market like this. And I do have sympathy for builders and the rising cost in every way. But I think to cut out this part of the service for customers is short sighted. So I don’t know where that will end. But I think to not be short sighted in decisions is usually a good thing, to look at the long picture. You know, some builders are still doing it. If everybody was doing it, then it would be one thing. But the fact that we still have many builders that are still doing the right thing and understanding that the broker can bring value and can help them too. We’ve got agents that really specialize in the new construction, and truly bring value to their clients, and understanding the ins and the outs of when things come up. If that customer was left on their own, I shudder to think how some of these transactions would end, because things happen during that building cycle that it’s important to have a representative in there to help and fight for you if things go south.
Matthew Blake: Interesting. I want to close just… You talked a little bit at the start about the Lake Norman area and some of the various towns around there. I think it’s important for me, as someone who’s been living in Los Angeles and then in Chicago right now, to sort of get a better understanding of all these markets. So, I guess just in closing, what might be a misconception that people have about the real estate market in the Greater Charlotte area in North Carolina? What should somebody in the Midwest or in the West know about Lake Norman?
Abigail Jennings: Great question. I think one is something that hasn’t changed, and that is that there still is a misperception that property values are very cheap. So we do get that a lot, like, you know, requested, “I want waterfront for 500,000.” Well, you’re not going to get… Maybe without a house. But then you compare it to, you know, San Francisco or other places, and it is much less. So, it’s not dirt cheap, I would say, but compared to other areas, maybe in the south, we are a little bit more expensive. Waterfront definitely is, and still growing as far as its value. I think we talked once about, you know, just the supply and demand about, you know, waterfront property, it’s limited. So, the value is there. They’re not making new waterfront property, so those prices are going to just keep on going up, most likely.
Matthew Blake: Yeah, that’s a good point. Well, Abigail Jennings, thank you so much for your time on this. This was really a good conversation. And yeah, this has been “Houses in Motion.” And thank you, Abigail.
Abigail Jennings: Thank you so much, Matthew.