If you have been looking for a house, the chances are pretty high that you know that the number of homes available for you to choose from is very low - and that many of these homes are going under contract within days, if not hours, many with multiple offers, and many sellers getting at least their asking prices, if not more!
This is because we have low inventory - and I don't see things changing in the near future! When I talk about low inventory, the first question I get is "What do you mean?" It could mean a number of things - it could mean that the number of homes that are on the market today is lower than the number of homes on the market last year - or it could mean that a certain area has fewer homes to choose from than last year - or it could mean that in a certain price point there are fewer homes to choose from than last year - or it could be all 3 of these things!
One of the things that we talk about is whether or not we are in a buyers or sellers market! So, how do you know what kind of market we are in? Most people define a buyers market as one in which homes take longer than 6 months to sell, while a sellers market is defined as one in which it takes less than 6 months for homes to sell!
So, if you are a seller - you are probably so happy to see your home's value rise, especially after coming through the long real estate market downturn we came out of where many seller's saw their home's equity fall! So you are probably more likely to get your price if there are fewer homes on the market - and lots of buyers out there looking! You potentially have the upper hand in negotiations because you may likely get multiple offers!
But keep in mind - your home will still need to be priced right - and it will need to show in pristine condition! Why?
(1) Buyers do remember the real estate downturn - and will wait out the market rather than paying an exorbitant price for a house that they are not convinced is worth the price the seller is asking! If you are going to sell your home for top dollar, it has to be in top dollar condition!
(2) Although many homes are going under contract quickly, there are a larger than usual number of homes that are coming back on the market! This means that contracts are falling apart! There are many reasons why this can happen - but one reason may be that buyers felt too rushed into making offers that were at or above asking price - then began thinking about it and perhaps getting buyers remorse! They may have become nit picky on inspections - or they may have used the HOA covenants & restrictions as a way out of the contract! If a buyer is going to make a top dollar offer very quickly, make sure you have the HOA package ready to give to the buyers and have your home pre inspected and repairs completed before listing the home so that inspections issues don't make the buyers walk away from your home!
(3) Even if the buyer is in love with your home and willing to pay top dollar, the chances are pretty good that a lender is going to have an appraisal done! And most appraisers are looking at what has sold, not what is on the market now! This means that if you are selling your home for more than what other comparable homes in the neighborhood sold for in the last few months, you need to make sure you can justify that price to the appraiser! After all, it is his value that the lender is going to base their lending decisions on!
So, if you are a first time home buyer - you may feel that now may not be the right time to buy! But it may be just the right time to buy that house and say good bye to your landlord! Yes, I know that you may be fighting the crowds going into the open houses, and yes, I know that there are probably going to be many offers on the property bidding up the price! But interest rates started to tick up slightly, and every time there is an increase in the interest rate, your monthly payment goes up! But, for most people, having their own home is better than renting!
So, if you are looking for a home, what should you do?
(1) Be educated about the market and especially in the areas you are looking in! You may not get a deal and you may not even be able to negotiate the price down - but if you have educated yourself about the market in the areas you are looking at, you will feel much more comfortable with what you will ultimately have to pay!
(2) Be prepared to offer over list price in many cases! In some areas of the city there were 29 homes that closed in the last 10 days - 12 of these homes sold in an average of 6 days for an average of 3% over asking price! If you are looking in certain neighborhoods you may find that you have to move fast and you have to offer over asking price to get your offer even considered!
(3) Consider being a backup offer! Sometimes your offer won't get accepted! But, with more and more homes coming back on the market, it is possible that the contract on that home may fall apart for whatever reason! If so, then your backup offer may become the primary offer!
(4) If you do find a home that you love, be careful what you say in the house! In today's age, there are many homes with nanny cams in the house and a seller may hear what you have to say about the house! If it is a house you love don't say how much you love it - but also don't nitpick the house apart either!
(5) Compromise where you can and love the home you can afford! In the Richmond area, there are areas that many buyers will want to live in but the prices have jumped up so much that these homes are no longer affordable for them! If you can't afford the neighborhoods you want to be in, consider other areas, or even compromise on some of the features of the home that you can live without for the first few years of home ownership!
Thinking of buying your first home? Thinking of selling your home? Have a question? Want to know what is happening in your market area? Feel free to get in touch with me and I would be happy to help!