How to buy a home in a red-hot sellers’ market
By KRISTI BAILEY
Facebook posts about new listings getting their first offer in less than a day are becoming commonplace. Ditto for examples of homes selling for – or above – the listing price. In fact, some areas of the local housing market are even hotter than the data appears.
That data shows a pivot to a strong seller’s market four years ago that just kept getting hotter. And when mortgage rates nosedived this year, it got crazy.
This summer, there were two big market drivers when sales made that strong V-shaped recovery from the initial reaction to the pandemic. They were – and still are – high buyer demand and lack of inventory from sellers scared to sell during the pandemic.
That’s beginning to change.
A current national survey found over half of the respondents thought now is the time to sell. They expect a better market than what we saw in 2020. At the same time, mortgage rates increased. It wasn’t a big increase. And it wasn’t the first we’ve seen in the past couple of months. That doesn’t matter. Rates increased, and moving rates always spur sales. That’s especially true in this market. It tends to make competition-weary buyers eager to lock in the best rate before the next increase.
I can’t tell you when or by how much, but rates will increase. Experts predict they will average out at about 3.5 percent this year. After that, who knows?
Meanwhile, the red-hot sellers’ market continues. Everything that comes on the market is getting snatched up. So, what can buyers do?
Sit down with your REALTOR® and set a firm foundation of what you can and can’t afford. With that foundation, if you find yourself competing with other buyers – and you probably will – it will be easier to avoid getting caught up and overextending in the chase.
Decide what you can and won’t do to get your offer accepted. Although it’s tempting, tread carefully about giving up contingencies. And never forgo an inspection. That is especially true if the seller is in a “selling as is” mode. Be a skeptic on walk throughs. Try to think like a home inspector. Are you seeing improvements? Or was the seller in a “putting lipstick on a pig” mood. Purge the HGTV visions if your pockets are not deep enough to afford the dream-home upgrade of a home with good bones or are not prepared to live in a perpetual do-it-yourself upgrade zone.
And finally, be aware of selling price trends, but don’t be tempted to move off the foundation of what you can and can’t afford. There is data on the buyer’s side. Not all homes sell for the listing price. Last year the average listing price was a little over $230,000 while the average sales price was $202,068.
Be prepared to act quickly while fully prepared to play the long game. Yes, homes are selling faster than ever, but don’t get caught up in the buzz. There are good deals out there. They just may not come at the same pace as sales.
NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in the Northeast Tennessee – Southwest Virginia region representing over 1,400 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics can be found on the NETAR websites at https://netar.us/voice-real-estate-northeast-tennessee .