It’s rough out there, house hunters. In the beginning, it was fun. But all of a sudden it has become a blood-bath, an intense winner-takes-all championship. As soon as a house is listed, there is a mad rush to see said house, then the pressure is on to write an offer before you leave. Then you just pray that your offer was good enough–I only put in 5k over asking, should I have 10k?–and that no one else beat you to the punch. If your offer makes it, it feels like a miracle. If not, instant despair sets in and you wonder what you can do next time. “I should have immediately left my family’s Easter celebration to immediately view the house. I should have put more over asking. On a scale of 1-10, how much will I regret forgoing the inspection?”
How did we get here?
We have the low rates of 2020 to explain how our housing economy is in its current shape. Before rates dropped, inventory of homes for sale wasn’t super high, but it was definitely healthy. In the midst of a pandemic, regulators more than likely want to keep up a healthy economy and rates were decreased. Of course, this only unleashed a buying frenzy. Many future homebuyers who may have been planning in the future to buy decided to take advantage of record-hitting low rates, and many investors fled to the market as well. The overall result landed us in a booming housing market, but the consequence was an incredibly low inventory of homes. Rates are still staying low, so buyers are still wanting to purchase homes. However, couple that with the regular amount of homebuyers you can expect, there is simply not enough homes in inventory to go around to all homebuyers. Unfortunately that has created a cut throat, highly competitive buying process with many clients having to offer more over asking, or even leaving out typical asks, such as the inspection process.
It doesn’t help that lumber has increased exponentially, a recent article reporting there has been a 130% price increase. Over the years lumber’s demand has soared as new construction continued to grow. We once again can thank the pandemic since there is now a classic supply and demand problem. It also certainly didn’t help the multitude of intense hurricanes disasters experienced in the south, which caused mass home improvements. What this means for you as a future homebuyer is that less people are going to opt for new construction since the price will be much, much higher. This will cause existing homes to be in even higher demand.
Realtor, Realtor, Realtor
Thought I was going to say, location location location, eh? Hiring the right realtor cannot be stressed enough. While there are literally thousands of realtors to choose from, a realtor is much more than just opening the door for you at house showings. You are going to need someone who will guide you every step of the way, who will fight for you when you are ready to make offers and make sure you won’t be taken advantage of. The best realtors will also be honest with you, are knowledgable about homes and not sugarcoat your housing situation. One thing that impressed me beyond measure was following our inspection, our realtor scheduled a phone call to go over each issue that was found. She then helped us decide should fixes should be asked for–and what we didn’t need to ask for. She guided us in so many more ways than just helping us find the right home.
What is the secret to success in today’s housing climate?
The formula to finally buying your home is snagging a hardworking realtor, know exactly your top maximum price you want to offer, and open up your schedule for showings. When I finally first saw my dream home via an online listing, we dropped everything to go see it as soon as possible. The current housing market does not favor a buyer leisuring viewing a home, taking days on end to make an offer, and offer way under asking (unless of course, the home you are asking for has been on the market for a while.) Be willing to put in over asking, but only if it fits your budget and you are comfortable with the price. By offering over asking, you are giving yourself a leg up than those who may offer just asking price plus waiving inspection and/or appraisal. I do not recommend waiving either of those as they are both necessary and protect the buyer.
There is hope, though! You and your realtor may need to be aggressive and soon you’ll have the keys to your dream home. The bonus of this whole situation is if, after your new purchase, you will need to sell your current home, man, now is the time to sell!