(NEXSTAR) – With inventory at all-time lows, houses are selling for astronomical prices across the nation. For buyers, it’s not so good news, but it’s good for sellers.
The demand for accessible real estate is “unprecedented in 99% of all MSAs (metropolitan statistical areas),” according to Dr. Jessica Lautz, vice president of demography and behavioral insights at the National Association of Realtors (NAR). “It’s really everywhere now; it’s not just your top tech cities anymore.”
Intense competition is also a result of low inventories. Homes frequently receive many bids that are more than the listed price and quickly enter into a contract.
What then should a buyer do? In particular, experts advise patience. Before a buyer has an offer accepted and a contract, Lautz warns that “it may take a number of offers.”
Nevertheless, there are three crucial actions a buyer can take to give themselves a competitive advantage, and it all begins before their ideal home even enters the market.
You must to have prior approval.
Do you already have a real estate agent on your team? Have you received a loan pre-approval? Do you have a clear idea of the amenities you want in a new home? If so, have you checked the prices of similar properties (in the neighborhood of your choice)? If not, you can be putting yourself in a losing situation.
“It’s not always going to come down to who has the most money when you’re competing with other people for scarce commodities like a house. According to John Manning, owner and managing broker of Re/Max On Market in Seattle, “it’s who presents the highest risk of failure.”
Manning suggests that purchasers obtain pre-approval from a bank that specializes in house mortgages, preferably with a loan officer who will go over all available alternatives prior to placing an offer, in order to reduce risk. “A great lender will make sure the file is complete, they’ll run worst-case scenarios, or if the interest rate goes up by a quarter of a percentage point,” adds Manning.
In this manner, the buyer will be able to confidently offer themselves as a qualified candidate when the suitable house becomes available.
After doing this for years, Manning claims to be able to identify students who have been paying attention in class.
You must comprehend the market.
In high-demand markets, we advise buyers to begin their search earlier than they anticipate, according to Scott Oyler of Coldwell Banker Realty in Cincinnati. “You have to act quickly because the market is so competitive. It’s a good idea to view a few properties in advance to familiarize yourself with the market and to be prepared to act decisively and quickly when you locate “the one.”
According to a recent survey by the National Association of Realtors, buyers are using real estate brokers more often to help them understand the market (88% as of November 2020, compared to 69% in 2001). However, you can’t just pick any agent. Experts concur that it must be someone who has in-depth expertise of the target region.
“Collaborate with a qualified specialist. Someone who can negotiate a strong market and ensure that your interests are taken into account,” claims Lautz. They could also bring up opportunities for you to look in places you might have otherwise missed.
Some may even go above and above to ensure that clients don’t pass on a prospective dream house.
A Coldwell Banker Realty representative in Arlington Heights, Illinois, Diana Matichyn, says, “We have to come up with innovative solutions for our buyers.” “I search for chances off-market. You can find me knocking on doors, asking people if they want to sell, and writing to homeowners in an effort to identify the perfect house for a buyer.
Knowing when to back off is important.
A solid awareness of the market can also assist purchasers in determining the price at which they should and shouldn’t be purchasing their ideal home.
Many people are aware of their purchasing power, but they may not fully understand the value of the item they are going to buy, according to Manning.
For instance, in a bidding battle, a buyer might submit an offer above the asking price and even attempt to mitigate risk for the seller by skipping an inspection occasionally.
But according to Matichyn, “in situations where there are multiple offers, you don’t always have to pay more to win, you just need to find out what’s important to sellers, and meet those conditions.” Forgoing the home inspection contingency is one thing you really must not do!”
However, in some circumstances, it might be acceptable—or even in the buyer’s best interest—to consider making an offer that is higher than the asking price.
According to Lautz, “It depends very specifically on that house and on that neighborhood.” In other instances, the home may be priced so that it is really less than [similar properties] that have just sold.
Those who are prepared to submit an offer above the asking price should think about how they want to use the house. Is it a flip or an investment property? Or is it a permanent residence? In the latter case, the additional funds probably won’t make much of a difference over the duration of the mortgage, especially if interest rates stay low.
If this is your primary residence, Manning adds, “you could be pretty sure that in 20 years, it’s highly unlikely you’ll be losing money.”
However, placing a large bid is a “deeply personal choice,” according to Manning. Knowing when to stop bidding is crucial, in his opinion.
“Don’t get auction fever,” he advises. The objective is to win on your terms, not to win the home at all costs.
