For those of you who are lucky enough not to have real estate agent friends filling every social media platform you share with pleading requests to sell your home, here’s what you need to know:
In 2021, just about every major and minor metro area in the US has an extreme shortage of housing inventory for sale. As we enter month six, the inventory crisis continues to shape the market and actually, April saw an all-time high in bidding wars on housing inventory.
What does that mean for you as a buyer, seller, or long-term homeowner? Let’s take a look.
List Prices Create Bidding Wars
As you’re looking for a new home, keep in mind that list prices are not final sales prices.
Many times, list prices are intentionally set below market value so the sellers can attract more offers and create an auction-type environment that causes hopeful buyers to bid for the best price.
Why do sellers do this? To get as many offers as possible to bid the price up again and again from competing buyers. Unfortunately, many of those buyers are desperate because they have lost every home they have loved in multiple-offer situations for the past few months. The clock is ticking and they know they’re running out of time, especially if they’re in a situation where finding a new home is imperative, such as a job switch or other important family changes. That buyer who beat your offer by overpaying with their opening bid? That could be you in a few months if you don’t get strategic about your next home purchase.
Prepare to Make a Higher Offer
If you want your offer to be considered, you’ll need to be prepared to offer considerably higher than the list price. Inevitably, few new buyers take this advice when it’s time to purchase their first home, and they end up sabotaging themselves on a potential purchase. Don’t fall into the trap that other buyers have found themselves in where they read a few blog posts about the market online and act without the expertise of a trusted real estate expert.
Be Careful With “Friendly” Real Estate Advice
Another mistake buyers make is taking advice from friends or family members who aren’t in the same buying situation as they are. It’s not a good idea to take home buying advice on making potential offers from anyone, even a well-meaning family member, other than a real estate professional. (For example, parents or in-laws who don’t live in your target area and haven’t purchased a home in over 30 years.) Especially now, given the current real estate market, the advice “always offer less than the asking price,” is terrible for anyone who actually wants to purchase a home.
Don’t get caught in a situation where you lose out on a new home that you love because of a multiple offer situation. We believe buying and selling is one of the most emotional transitions and also one of the most important financial decisions you can make.
If you’re ready to work with a different kind of real estate team who will guide you through buying and selling your home, contact our office. We can’t wait to get started!