Do you have Home Buyer Burnout? Should you take a break?
In today’s world of rising home prices, multiple offers, bidding wars, and inventory shortage buyer’s fatigue are very, very real.
Home buying, since the pandemic has drastically changed and today I discuss what to expect, how to persevere, how to prepare, and what the market is like heading into Spring 2022.
As we know the housing market nationwide continues to blaze new trails. For every article, I read that housing is slowing I see an article or headline revising the latest headlines. This tells me that NOONE can predict what will happen next. But something I do know. This market is and can be exhausting for homebuyers.
Home buying is one of the largest investments that most people make in their lifetime. In the Florida area, a significant number of our buyers are finding themselves looking for the second home that they have been planning for years or looking at downsizing once retirement starts. In addition, today, many people work from home. Lifestyle more and more younger people and families are also moving to our area.
Moving and purchasing a home rank pretty high on the stress level and buying a home in today’s market is definitely stressful. 70% of all homes sold in today’s market receive multiple offers on them. With as many as 10-15 offers on homes that are priced well, have great locations and are in wonderful condition. Even a few in not-so-great condition can find themselves with 4-5 offers in today’s world.
So what should you expect if you are a buyer and how should you prepare?
First I think it is very important to mentally prepare. Please know that competing in today’s househunting journey includes losing out on homes. As hard as it is to not fall in love with a home it is extremely important to know that other homes will indeed come on the market if you do not get the first, second, or 3rd home you offer on.
Another very important step is to not look at homes that are at the very top of your price point. If you are hoping to purchase a home for 750,000 do not look at homes over 725,000 as it is quite likely the final price will be higher than the list price.
When looking in specific neighborhoods ask your agent what the comparables are, what is the average amount that homes are going over in price. The average home may be going for 4-5% over list price while others may see offers well of 10% above list price.
Pool homes are selling at a premium and we are seeing some of the largest price increases in these homes.
Before you start looking you need to have all your finances in order. Are you purchasing a home all Cash, If so you should provide your agent with a letter of proof of funds before house hunting?
If you are financing discuss with your lender your loan limits, the cost to close, and the alternatives you may have. For instance, I have a home buyer with a significant amount down. Instead of writing the contract with a large downpayment, the lender suggested we prepare the offer with only 10% down. Most sellers are requesting buyers cover the difference between the purchase price and appraised price. In this situation, if the appraised value was 10% below the purchase price the buyers had the ability to put that extra amount down making them a very safe and strong buyer.
So do you have to only be cash buyers to win in today’s market, NO? Does it help, yes, cash buyers are winning 80% of the time? And 50% of our transactions are cash buyers.
If you have the cash but wanted to take advantage of these low-interest rates talk to your investment managers. Is it possible to pull money out, close on the home and then turn around and put a mortgage on the home and put the money back? I do realize there are costs involved in doing this but with home prices rising every month what is it costing you to wait.
If buyer fatigue has really set intake a week or two off from looking, evaluate what it is you are looking for. For instance, does having a home with a private pool important, or do you need to be in a specific location. What can you change on the priority list that may help you?
Could you look in alternative areas that may be a bit less competitive and less expensive? Could you purchase a condo as opposed to a home?
Working closely with your agent and your financial institution is extremely important. Many lenders are willing to go too bad for you and have been incredibly helpful when it comes to financed buyers winning offers.
If financing is your only option keep in mind you will need to go in very strong to beat out cash offers. Cash offers do be a little less than financed offers so determine, what is the strongest offer you can make that you feel would actually make a seller want to work with you.
Other factors to consider when making offers have to do with earnest money and inspections. Should you waive inspections. I never suggest however I am seeing this happen. If this is something you are considering you must know the age of the roof, Air Conditioner, and other major mechanics of the home.
And finally having large earnest money has also helped my clients win offers. Sellers need to know that you will not change your mind for any reason and will reward buyers that put their best foot forward.
Keep in mind that home buying has become a process that may take months longer than in the past but I assure you we always find a way and a home for those that are ready and willing. My team and I show homes every day and watch the market, what homes are selling for, what the average amount that homes are going over in price, and discuss with the listing agents what the sellers are looking for.
Don’t give up. Your dream home is out there and we are here to help you find it. If you have any questions about today’s real estate market please give me a call and let me know how I can be of help.