When Lindsey Morris saw a contemporary two-story house for sale online, she knew it was \u201cthe one.\u201d It was a unique property for the Canton, Michigan area. \u201cMost of the homes are either quad levels or colonials,\u201d said Morris. \u201cThis one was modern, it stood out.\u201d<\/p>\n
After touring on a Thursday in early July, Morris was sure the house would sell quickly. But her real estate agent suggested waiting a few days before making a bid, explaining that sellers usually want to get as many offers as possible and then accept the best among them.<\/p>\n
Morris hurriedly gathered documents to get pre-approved for a mortgage. The good news was she found out she was preapproved the following Monday. The bad news was, that same day, her agent texted her a screenshot indicating the property had sold to someone else. Morris\u2019 dream home had slipped through her fingers. \u201cI feel like I wasn\u2019t really even given the opportunity to move fast because it went so fast,\u201d she said.<\/p>\n
For the four-week period ending July 12, the total number of homes for sale was down 28% from the same period a year ago, according to real estate brokerage Redfin. Five percent fewer new listings hit the market during that period as well, making the imbalance between supply and demand even worse. In June, 54% of Redfin offers faced competing bids.<\/p>\n
\u201cThe sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,\u201d said Lawrence Yun, National Association of Realtors chief economist. \u201cThis revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.\u201d<\/p>\n
The housing market has continued to heat up despite increasing coronavirus cases and new shutdown orders. In Miami, where coronavirus cases are surging, \u201cnot much has changed,\u201d observed local Redfin agent Carlos Mahone. Adding \u201cSince the initial lockdown ended, buyers have been much less fearful and are operating like they did before, including wanting to walk through homes with an agent, often after seeing the home first via a video chat tour.\u201d<\/p>\n
Be prepared to pay list price \u2014 or more<\/strong><\/p>\n Home sellers are setting higher bars on the list prices of their homes, and buyers are willing to meet them.<\/p>\n Chicago resident John Frigo has been searching for a home in the Tampa-St. Petersburg, Florida area for several months after being beaten out by higher offers. \u201cAnything that\u2019s not in disrepair and is priced appropriately isn\u2019t lasting more than a couple days max before getting an offer,\u201d said Frigo. \u201cI recently offered the full asking price on a property in cash. By the time my real estate agent put in a call to the listing agent, the home already had multiple offers.\u201d He was told he would need to increase his offer by $15,000 to get the house. Instead, Frigo continues looking for a new home. If it seems like a bidding war is heating up, a buyer needs a plan to beat the competition and a clear understanding of what the seller is looking for in a buyer.<\/p>\n \u201cThere are really two types of people that are looking for places outside of New York,\u201d said Martin Eiden, associate broker with the Martin Eiden Team at Compass in New York, who has been holding virtual relocation sessions for people considering leaving the city. The first are people who were planning to relocate within the next five years, but decided to accelerate their move because of the coronavirus. There are also second-home buyers seeking refuge in more peaceful (and spacious) settings. \u201cThose two crowds are creating bidding wars either in the second-home market for metropolitan New York, as well as the suburbs,\u201d he said.<\/p>\n Especially when moving to a new place, it\u2019s critical to know your market. \u201cStudy what has recently been sold, within the last six months,\u201d explained Eiden. \u201cThat should give you an idea of a starting place on a price. And if you\u2019re with a good agent, the agent should be able to guide you to a price.\u201d<\/p>\n Get pre-approved for a mortgage<\/strong><\/p>\n Joe Stacy, senior vice president and general sales manager of Berkshire Hathaway HomeServices in Chicago, recommends getting a strong pre-approval from a reliable lender.<\/p>\n \u201cWe are seeing some lenders that are more focused on refi business, and because refinancing is so strong right now, they are not making their commitment dates on purchase contracts. That\u2019s a problem,\u201d he said, explaining that home buyers need to make sure they choose a lender that specializes in processing purchase applications.<\/p>\n Eiden cautions against making a generic pitch. Instead, obtain a pre-approval mortgage letter citing the specific property and address. For instance, \u201cThey are qualified to buy a property on 123 Main Street for $500,000.\u201d<\/p>\n Don\u2019t get greedy<\/strong><\/p>\n Waiving contingencies is a common strategy buyers use in a hot market to make their offers more competitive. A contingency is a condition that must occur before the deal can close. For example, a home inspection is a common contingency that allows buyers to cancel the contract or negotiate repairs if they are not comfortable with the inspector\u2019s findings.<\/p>\n According to Redfin, 20% of successful offers submitted by its agents agents waived the inspection contingency in June, compared with just 13% during the same period in 2019. More buyers also waived appraisal contingencies.<\/p>\n Stacy said this is not the market for requesting personal items such as a pool table or washer and dryer and hoping someone will bite. \u201cIf you\u2019re in a multiple-offer situation, you want to have the strongest offer possible,\u201d he explained. \u201cPutting some of those contingencies in can dilute the quality of the offer and make a seller go with somebody else.\u201d<\/p>\n Make it personal<\/strong><\/p>\n The buyer who offers the highest price is not always the winner. In some cases, writing a heartfelt letter can resonate with a seller.<\/p>\n \u201cI think it\u2019s important that you gush up a little bit,\u201d suggested Eiden. \u201cI love the beautiful landscaping you\u2019ve done. As soon as I walked into the family room with a fireplace, I envisioned having my own family here. I noticed you\u2019ve taken really good care of the property. I love the color choices you made. Anything like that, because I think every seller wants to make sure that their property is going to be enjoyed.\u201d<\/p>\n Offer the unexpected<\/strong><\/p>\n Most people bid in round numbers. So Eiden has found throwing in an unexpected digit to be a highly effective negotiation tactic.\u201cIf it\u2019s a bidding war, if everyone bids $550,000, and you bid $553,000, guess who gets the property \u2014 you.\u201d<\/p>\n
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