A home buyer tool kit for today’s hot housing market
By KRISTI BAILEY
The housing market pivot from the brief coronavirus sales lull arrived with a bang in June. It was the best single month for closings, and the average sales price was the highest the Northeast Tennessee Associations of REALTORS® Trends Report has ever recorded.
Don’t expect conditions to ease over the next couple of months. Demand keeps increasing, so there are more buyers out there. There are no signs that mortgage rates will move off their historic lows, and the inventory keeps getting tighter. During June, the region had 2.7 months of inventory. Active listings were down 37.6% from last year.
The best forward-looking hard data we have is new pending sales. Sellers accepted 881 contracts in May and 886 in June, a 27.5% increase over June last year.
So, what can house hunters do to improve their position?
First and foremost, partner with a local professional REALTOR®. The old saying the “early bird gets the worm” is at play in this hot, hot, hot market, and REALTORS® have higher-level access to market data than consumers can get on the Web. They also have the technical expertise to help clients navigate the complicated – and frustrating – real estate transaction process.
Shop for and select a lender first. That’s important because interest rates are at historically low levels, but only those with the best credit scores and strongest financial position are going to get those super-low rates. Lenders are asking for more financial information in today’s lending climate, but clients should also be picky about what they are getting.
If at all possible, go for an all-cash sale. While it’s not an option for many buyers, about one in three local resales are all-cash deals. Some – but not all – of that comes from the increasing number of out-of-state buyers relocating here flush with cash from selling their previous homes in a more expensive market. Sellers like cash deals because cash streamlines the process by bypassing financial issues.
Loan pre-approval is a sure-fire way to signal, “here’s a serious buyer.” It’s also important because there are ample examples of buyers finding a property only to lose it while they were getting approved for the mortgage.
Although the average time on the market for a June closing was 103 days, some can close in a week or less.
Another consideration to beef-up an offer is going easy on contingencies. But that doesn’t mean you can balance an under-market offer with no contingencies. The goal is to remove obstacles to getting to yes.
Put your best offer out there before someone else comes along and snatches up your potential home. Lots of listings are getting multiple offers. Sellers have the option of giving buyers a heads up but may choose not to do so. Acceptance of lowball offers is very rare in today’s market.
Even though inventory is tight, prices are up, and there is more competition, buying a home is still an excellent financial decision. There are good deals in today’s market. That is why savvy house hunters have the tools to be more competitive. There are more than those previewed here. A professional local REALTOR® knows them all and how to find and help clients quickly move when opportunities present themselves.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,350 members and 100 business partners involved in all aspects of the residential and commercial real estate industries.