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How to Navigate a Seller’s Market
Here we all are, trying to get through the final months of the pandemic. Having been cooped up with family members and realizing our homes are too small to both live and work in (for some). Interest rates are low and we feel better about going and out and about to look at homes now. What many buyers are finding out is that many other families have the exact same idea! They are getting their offers beat out or worse yet don’t even get to see the home because it went under contract too fast. It is super frustrating to fall in love with a home that 25 other families fell in love with too! It is like being on the Bachelor and not getting a rose. Never fear, I am here. I am going to show you how to navigate a seller’s market.
First of let’s discuss why we have this problem to begin with. It comes down to one simple word: Inventory!
The shelves are just about empty. Being fearful of the pandemic, many sellers have decided to hold off putting their homes on the market. Understandable. Why you would not want people walking through your home and touching your doorknobs and such? Although many Realtors have been trained on how to handle showings, it still makes several home owners uncomfortable. If you are thinking of selling, talk to your Realtor about how they will handle showings during the pandemic and follow up to make sure it is being done.
Now let’s talk about another big problem. The MAD RUSH. Where are all these people coming from and why? The truth of the matter is there were always a lot of buyers. Only difference is, we had homes for them to pick from. Yes we do have a few more buyers now due to low interest rates and the desire for many to move to more affordable states, but still have not many homes to pick from. This low inventory and increase in buyers has created what is called a Seller’s Market. The seller has the upper hand.
So now that we have the WHY let’s discuss the HOW. How to Navigate a Seller’s Market. I am going to break this down in to bullet points for simplicity sake.
- Determine your need to move – Do you need to move or want to move? If you just want to move, consider waiting until the market cools off. No Realtor in the world will agree to this, but I am here to help you. If you need to move, let’s continue on.
- Speak to a Lender – Think of the lender as the person that will give you the map. In this market you have to move very FAST. If you are already pre approved, then you are able to make valid offers more quickly. Imagine falling in love with a home, then finding out you can’t afford it. No way! Get your map (pre approval) so you know where you are going.
- Find a Full Time Realtor- What do I mean by that? Some people choose to get their license and work part time as a Realtor. In this market you will need a Realtor who is looking at the market several times a day and contacting you immediately if something comes up that will fit your needs. Don’t be afraid to ask. This is your journey and you need to assemble the best crew.
- Work with Your Crew- Your Realtor will be the crew leader, so to speak. They will watch the market, contact you, and set up appointments to view homes. Once under contract, they will have to negotiate the terms and be in communication with several other crew members (lenders, title, seller agents, inspectors appraisers….) They are doing this on your behalf so please be available to answer any questions.
Last, let’s discuss the dreaded Multiple Offer Situation. This is when more than 1 offer is submitted on the same property at the same time. Very common in today’s market. There are several ways to handle this. None of which are very pretty if I can be honest. Let me break this down in to bite size pieces again.
- Be OK to Walk Away – Do not ever get emotionally attached to a home. There will be others. I have always said it is like dating, sometimes you have to kiss a few frogs before you find your prince.
- Offer Over Asking Price – Unfortunately this is what is happening today. If you know there will be more than 1 offer, you should consider making your offer the most attractive. How far over is best determined by you, your lender and your Realtor. Just know that the home may not appraise for more and you will have to make up the difference out of pocket. Are you prepared to do that? I caution my clients to set a limit and do not exceed that, no matter how much you like the home. Don’t get caught up in the craziness.
- Escalation Clause – This is a form your Realtor will submit with your offer stating you will pay (up to a certain amount) over what they highest offer is. Keep in mind other Realtors are doing the same thing so it may not work.
The bottom line is, there is no magic bullet. Persistence and patience will be your best defense to navigate a seller’s market. Work closely with your Realtor and you will find your home. If you are looking for a crew leader, Chris and I have over 14 years combined experience in navigating the waters. Let us help guide you!