5 Tips Home Buyers Need to Know in a Sellers' Real Estate Market
Based on recent experience as a Realtor, I wanted to prepare home buyers for how they can battle in this brutal, seller’s market. We’re witnessing a black swan event activated by the confluence of a 100-year pandemic, a broad work-from-home mandate, and historically low-interest rates. The unprecedented low interest rates make buying a home affordable, so first-time home buyers are jumping into the real estate market in record numbers.
The work-from-home mandate accelerated employers allowing employees to work from home -- indefinitely. With a pandemic raging, people are escaping dense, urban living, seeking a safer environment, more square footage and serene regions. San Francisco is experiencing a migration of employees relocating outside of California or away from big cities. Marin County and Sonoma County are experiencing a surge of these eager home buyers.
Currently, Sonoma County’s real estate market is highly competitive as demand outstrips supply. It doesn’t matter if the property is a condo, house, luxury home or land; buyers are quick on the draw to make offers. Bidding wars are now common. I just helped one client finally clinch the winning bid on a home after the couple was outbid on four other properties. To get a sense of how competitive it is among home buyers, one of the properties had 29 bids and another received 13 other offers -- many of them all cash.
I’ve put together some valuable tips for how home buyers can improve their chances of clinching a home during the home buying process in the current seller’s market. For starters, it’s important not to set your heart on any particular home. Otherwise, you could be in for a big emotional letdown.
Get pre-approved. Getting a pre-approved loan is a critical must-do step. Contact a mortgage broker right away so that you obtain a loan approval amount and a pre-approval letter -- before you begin your home shopping process. This move puts you in a strong position to advance your offer with a seller.
Be prepared to pay over the list price of the house for sale. The asking price for a new home listing may be a teaser rate. In this seller’s market, many homes are being listed just below market price. Real estate agents do this to generate multiple offers. Bidding wars are the reality in the current real estate market. Low inventory, surplus buyers, and teaser home list pricing means that home buyers, particularly in heated markets, need to be prepared to pay as much as 5-10%, sometimes more, over the asking price of the house.
Keep the terms of the offer simple. Make your offer simple. For example, an offer such as a 30-day close, 17-day inspection, and 21-day appraisal is good. If possible, refrain from a 60-day close, contingent on the sale of a home, repair requests completed before the close of escrow, or negotiating for personal items from the seller's home.
Act fast as time-is-of-the-essence: Unprecedented buyer demand means that there can be anywhere from 5 to 30 offers made on a single property. Currently, the days on the market for a new home listing are anywhere from 1 day to 15 days. The competition is so fierce that some new home listings are receiving multiple offers on the same day of listing. Therefore, buyers should be extra vigilant in working with their real estate agent to strategize, decide and act fast.
Be flexible. Do look outside the range of your parameters (i.e., square footage, lot size, price, number of bedrooms, fireplace, etc.). If home buyers can be more flexible in what they seek in a home, they’ll be able to consider more properties and increase their chances of finding one they want to buy.
In this seller's market, you will become disheartened but don't give up! Be patient, remain hopeful and persevere. To learn more tips on how to succeed in securing your new home, please contact me. I'd love to help you secure your dream home.