In case you hadn’t noticed, we are
currently in the midst of a very hot “Sellers’ Market” in real estate. This is certainly true in the Charlotte
metropolitan area and in many regions of the country. Of course, sellers love it. It is possible to “push the envelope” on
price by listing a home at or above the most recent comparable sales and
watching buyer interest continue, almost unabated. There is a limit to this, and sellers who
price their homes unrealistically high will see interest diminish and may
encounter problems getting to closing, if the home does not appraise at the
contract price, for example. Nearly
historically low inventories of resale homes are fueling this market; and this
lack of inventory and abundance of buyers is concentrated more in the lower and
middle price ranges than it is at the higher end of the market. But it continues to cause challenges and
frustration for many buyers. However,
there are ways to deal with it.
First, research is more critically
important than ever in this market.
Buyers need to work with an agent who has access to the current database
of comparable homes for sale and comparable homes sold. Those free public databases like Zillow and
Trulia won’t help you here because they are neither current nor complete. When a buyer identifies a home he or she is
interested in, the agent should prepare a quick “Comparative Market Analysis”
of the home to see what else is currently available, and even more importantly,
what comparable nearby homes have recently sold for. If the listing price of the home you are
interested in is unrealistically high, make an offer that makes sense in the
context of “the comps.” If that means
you lose the home to other interested buyers, so be it. Let them overpay for the home and move
on. Don’t get caught up in the frenzy of
buyers competing to get a home under contract at any cost. Set a ceiling price above which you will not
go.
Secondly, make sure you are prepared to
make an offer. This involves getting
preapproved for the mortgage financing you will need. Not only does this give you some certainty on
what sort of home you can truly afford, it also results in the issuance of a “Pre-approval
Letter” by your lender. This letter can
then be attached to any offer made, and this tells the seller they are dealing
with someone who is serious-- ready, willing and able to close the purchase.
Third, be ready to move quickly when you
have identified a property that makes sense.
You and your agent have done your research, and you are armed with your
Preapproval Letter. With inventory as
low as it currently is, when a home enters the market at a reasonable price,
you should be aware that you are likely not
the only buyer who has noticed it.
Try to get out to the house to view it as soon as you possibly can. This may require some flexibility in your
schedule and that of your agent. But a
delay in seeing the home and making your offer can mean the difference between
an accepted offer and having a multiple offer situation in which you are
essentially bidding against other buyers for the home.
Finally, persevere. Keep at it.
Don’t get discouraged. Every
buyer who has beaten you to a house you wanted is someone who has been
competing against other buyers, just as you are. But he or she kept at it until he or she got
a home under contract at a price that made sense. This real estate market can be frustrating
and discouraging to a buyer. But
mortgage interest rates remain very low and, in most cases, it can cost less to
own a home than to rent one. Moreover, paying
down a mortgage over time enables the homeowner to build equity and wealth the
renter obviously does not build. Even in
this tough market, the reward is still there for those who do their research,
prepare themselves, act quickly and decisively and persevere.
