Real estate attorney Mario Castellitto found that property prices were rising fast as the pandemic spread. At one point during his search for a home, he made an offer on several houses but was outbid by more aggressive buyers every time.
Castellitto felt frustrated as he watched other buyers snap up houses. Eventually, he purchased his home by offering the seller a significant amount above what was asked.
The harsh reality of today’s mortgage-fueled housing market is that too many buyers are chasing after a limited supply of homes. As a result, potential homebuyers must pay the above asking price to get the seller’s attention, much less seal the deal.
Those with the means can circumvent traditional financing and appraisal processes. For example, Andy Sachs (a real-estate agent from Newtown) says that some homeowners have bid on houses without even inspecting them first—simply offering all cash for a home’s asking price. “It’s just bananas,” he says of this practice.
The pandemic created an imbalanced housing market, reducing supply and growing demand. Mortgage rates slipped to record lows for a time—only increasing the rush by buyers to bid up prices even more.
Buyers need help to make a sale.
Due to these demand and supply factors, home prices are rising sharply throughout the country. Although mortgage interest rates have ticked recently, a shortage of available homes remains widespread.
The shortage of available homes has made it more challenging for buyers to find a property. Given this reality, homebuyers need to put on their game faces. And those who need mortgages may feel at a disadvantage when doing so.
Get a great real estate agent to represent you.
Navigating today’s market is tricky, and only experts can provide the guidance you need. You want to partner with somebody who has seen it before and knows how to handle challenging circumstances. A buyer’s agent—one who can be handy and quick on their feet — is necessary when buying real estate.
To succeed in such a market, consider these six strategies:
1. Move fast
Inventory shortages mean homes are selling quickly. To snag the home of your dreams, a Real estate expert advises homeowners to prepare for tours as soon as a listing goes live. With so many shoppers forgoing appraisals and inspections, there’s no reason to haggle over minor repairs or other small sticking points. With the need for speed, many buyers make offers before even positioning their foot inside a property.
2. Consider your financial situation before looking for a mortgage lender.
In more stable real estate markets, a preapproval letter from a lender is usually enough to satisfy most sellers. But in today’s frothy market, you risk having your offer rejected even if it comes with one of these letters—which may have less meaning for the seller than ever before. When a seller receives multiple offers, they will pick the most certain offer.
3. Make an assertive offer
In normal demands, a home’s asking price acts as the ceiling. It’s what sellers hope to get for their property—but it doesn’t necessarily reflect reality. However, the asking price is often used as a floor in this market. If someone offers less than that amount at closing time on Sunday night or Monday morning (depending upon your state), then you miss out entirely and move down another spot in line until somebody else makes an offer within the range. Cash offers have fewer conditions than other bids, so sellers are likely to prefer them.
4. But don’t overpay
Prices are rising so rapidly in many areas that buyers may easily overpay. When you see a bunch of people offering more than the asking price, it is natural to think you should bid higher yourself.
The appraisal can act as a guardrail against paying too much for home sellers who need financing. While appraisers understand that values are spiking, they’re unlikely to assign an inflated value to any particular house, especially given recent real estate market valuation trends.
If the appraisal shows that your offer is less than what you agreed to pay, you’ll have to make up the disparity out of pocket.
5. Connect with the seller by sharing stories and exchanging personal views or info.
It isn’t always achievable, but it’s worth a shot. If a seller seems likely to like the prospective buyer, he encourages them to stay home for showings. The strategy: If the seller establishes a connection with the bidder, that offer might stand out among others.
6. Be willing to wait
It’s impossible to predict the housing market’s direction, but it may be possible for us to enjoy a slowdown in rising home prices. According to real estate data firm CoreLogic, waiting comes with its own downside: Home values rose 20 percent nationally from February 2021 to February 2022. This trend suggests that home prices will increase even more before you can move in.