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Barbara Corcoran on housing market: 'Every buyer out there is panicked and depressed'

A new survey from Zillow found that 1 in 10 Americans say they have already moved this year. The Corcoran Group Founder and Shark on ABC’s ‘Shark Tank’ Barbara Corcoran joins Yahoo Finance Live to discuss.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. I have the distinct honor and privilege here of bringing back on one of our guests here to discuss a boom in real estate we've seen play out over the last few months here, continuing to run red hot during the pandemic with buyers tripping over each other to compete on bids with what little inventory still exists out there on the market.

Now housing experts at Zillow are calling for 2021 to be the hottest year for existing home sales since 2005, notching a more than 17% jump over what we saw happen last year in 2020. This year, projecting to hit 6.6 million sales nationwide. And for more on the latest on the real estate front, as well as all things small business, I have the privilege-- nay, the honor-- here of bringing on our favorite shark from the tank. Barbara Corcoran joins us now.

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BARBARA CORCORAN: Hi, Zack.

ZACK GUZMAN: Barbara, good to be chatting with you again. Good to see you. I mean, we've talked a lot about real estate being very busy right now. But when you look at it, we're talking also about, you know, inventory shortages. What are you seeing right now? Because it sounds like a lot of buyers are competing against each other.

BARBARA CORCORAN: More than anything else, I'm seeing that every buyer out there is panicked and depressed. They're panicked and depressed with good reason. Most people are being forced to spend a lot more in the house than they ever thought they would. Prices are up just in the last 12 months alone. Actual sale prices are up 15%. I don't know if that's a record. I just don't remember ever a time where prices went up 15% in a year. I should have really checked that out. Not in my memory, anyway.

And you know what? The people are making bids, putting 10% down more often, 20%, 25% down. And they're waiving all the contingencies. And that's proving a problem most recently because people are not getting the financing. They've made it all cash bid. Or they're waiving inspections, and they're finding that there's a lot wrong with the house. And they're already committed. So overall, I would say that the buyers have had the toughest, especially the last six months, than I have ever seen in my life.

ZACK GUZMAN: Yeah, that's why it kind of-- it seems to me like it might be time to hit the brakes if you are a buyer out there, right? I mean, if you're kind of having to deal with all that. The Zillow survey says that 1 in 10 Americans say they've already moved in the past year. I suspect that it might get a little bit more intense in terms of the buyer's competition here. So when you see that, would your advice be maybe, you know, wait a bit if you can here since it seems like supply and demand is so out of whack?

BARBARA CORCORAN: No, because I don't see any end in sight. If you're going to wait even three months, you're going to pay another 3%, 4% for a house three months from today. So no, that's not a good philosophy. That would be hiding out and hoping that we have a bubble, which would never go-- which this is nothing like a bubble. Prices are going to keep going up.

I think for the buyers out there, I think there's a couple of things that can be very helpful. Number one, they should know what they're signing up for when they go out. Most are in shock, just that they're going to have to stretch on price. And most importantly, they're going to have to put their biggest bid upfront. I mean, most buyers take the loss of three or four houses before they realize they have to really put their belly up to the bar.

So figure out what's the absolute most you'll really spend on the house and put that bid in right on the front side. Because most houses are only staying on the market one day to eight days right now. So you don't have the time to go back and put in a better bid. It's not that kind of a market. I think having an attitude that this is not your dream home, what you're really doing is getting in the game. It's important to get in the game and have a chip on the table so you can play the game as you need a bigger backyard, and you need more space for your kids, blah, blah, blah. And a lot of people are taking that first purchase too seriously.

And most importantly-- in fact, I should have started with this-- I think you have to waive all the contingencies which scare the crap out of people, meaning you should get prequalified for your financing. To go out shopping without financing in hand, you have to be crazy because you have to position yourself as an all cash buyer today. And everybody's got a brother-in-law that's in the contracting business. I would, if I was buying a house, take a contractor out with me and shop with me, pay them by the hour. Just come out and see three houses because that contractor is better, honestly, than an inspection. He could tell you what's wrong with the house so you don't get in over your head.

AKIKO FUJITA: Barbara, you keep putting me in the depressed category, as somebody who's been looking and seeing prices go higher and higher. Let me ask you this, though. When you look at markets around the country, what's one market, one city that you really feel like offers good value for the money? I know that's not how people move. But if you're looking at where things are heating up, where things offer the best value, what city or what markets do you see?

BARBARA CORCORAN: If I had to name one place, I'd say Raleigh, surprisingly. The average sale price-- I might be off by a few dollars-- is around 340 ish. You get great value there. And it's also one of the top three hottest cities to find real estate. So it's the most competitive, but the values are still undervalued. And so many young families are moving in. It's an educated population. That's probably, in my mind-- if you had to narrow it to one-- probably the best value right now in America, even though you're going to have to compete to find a house there.

ZACK GUZMAN: Yeah, I have a friend who just bought a house in Raleigh who's going to be very happy to hear you say that. I just came back from Durham not too long ago. Great spot to be. You know, lovely down there.

But enough real estate for me, Barbara. I want to shift over to your other area of expertise. Of course, as you've invested in 80 businesses so far on "Shark Tank," you obviously work closely with a lot of entrepreneurs. We've talked a little bit about the recovery before, but it seems like we've entered a strange kind of period here, where a lot of businesses out there are having difficulties hiring workers back. I'm curious, have you seen any of that in the companies you work with right now as people kind of get back to work at this stage?

BARBARA CORCORAN: Well, first of all, out of all the businesses I've invested in through the pandemic in the last year, I've lost a third of them. They're out of business. Another third are wobbling by, thinking they're in business, but I'm not that hopeful. And a third have expanded their business. So it's interesting how this pandemic has really separated the boys from the guy-- men from the boys-- is that the expression? The women from the girls, you know.

But so far as hiring back workers, the people who are most generous with trying to keep their workers on as long as they could and sharing the limited hours they had to share and addressing their staff upfront and personal right away when the pandemic hit are the ones that are not having problems getting the workers back because they've built in that loyalty because they've handled the circumstance in the most fair way possible.

But others that lapped off workers-- and they tended to be the larger companies of the group-- without any kind of personal relationship or explanation, like it's just got to be done-- that was their explanation-- they're having a hard time hiring. And I don't want to say they deserve to have a hard time hiring. But they had no problem laying people off pretty quick without an explanation. And with the benefits from the government being so extreme right now, I think that's the biggest problem.

It's not just about which business is having a problem, it's all businesses are having a problem, particularly in the retail low paid sector-- stores, shopping malls, that kind of a thing. They are all having problems hiring people back. And I don't see that getting any better. In fact with almost a million jobs, new jobs, being created in the month of March-- and no one thinks that's going to change-- I think it's going to get worse. I think is going to be the most competitive market for workers on any level over the next quarter. And I think all the businesses are going to feel that pinch for sure.

You know, I know for myself. Let me tell you, I'm telling every one of the people I work with every day, god, you look gorgeous. God, you're brilliant. Gee, you're amazing. [INAUDIBLE] OK, I'm, like, leaning on because I don't want to lose anybody. I have a little operation now that manages a lot of stuff. I want to make sure everybody is really appreciated. I'm not messing around.

AKIKO FUJITA: Barbara, you just alluded to the benefits being extreme. I mean, what specifically do you mean by that? And how do you think the government should be allocating some of that money that has been going out in the form of additional checks, as well as loans to small businesses?

BARBARA CORCORAN: Well, I wish I had a strong opinion. I would rather criticize the government than give you my angle on how to fix it all up because I have no idea, or I'd be in the political game, right? But I do believe the amount of payments not to the people who are in dire need, but the people who can go back into the job force, they're able to go back into the job force, but they're making more money at home, just comparing those two paychecks, that's damaging to the whole economy. It's done from the right place, which is the heart. Like, we want to see people through, get them through this breach. But with the job market increasing and employers really needing people back at work, I think it is dampening the recovery more than people think it is.

ZACK GUZMAN: Yeah, and those compliments only get you so far, right? When we're talking about raises out there being requested as well. So far, not necessarily seeing an uptick--

BARBARA CORCORAN: Not me. My compliments are so good, they're going to last for, I'd say, at least a year.

ZACK GUZMAN: Well, that's why we got to have you back because I don't think I got any this segment, Barbara. We'll have you back on hopefully soon to chat about all that more. But our favorite shark here from "Shark Tank," Barbara Corcoran, always love having you on. Appreciate you taking the time, as well. Be well.