5 Tips for Making an Offer in a Hot Real Estate Market

5 Tips for Making an Offer in a Hot Real Estate Market

Steady demand. Limited supply. That’s what we are seeing in real estate markets across the country right now. Inventory is particularly tight within the lower price ranges. “The starter house is nearly missing in some markets,” according to Jessica Lautz, managing director of survey research and communication for the National Association of Realtors.

Of course, conditions can vary from one city to the next. But the overall trend in housing markets across the country is that supply is still falling short of demand.

Given these conditions, it’s important for home buyers to make a strong, smart offer when the right house comes along. Here are five tips for doing exactly that.

1. Understand the supply and demand situation in your area

According to housing experts, a so-called “balanced” real estate market has five to six months of supply. This means, in theory, that it would take five or six months to sell off all homes currently listed for sale if no new properties came onto the market.

Many real estate markets across the country have less than a three-month supply right now. And some cities have less than a two-month supply.

The first step to making a strong offer is to understand the supply-and-demand situation in your area. We are still seeing sellers’ market conditions in many cities, as of spring 2018. And this could persist for some time.

2. Study recent sales prices in your area

This is something a real estate agent can help you with, but you can do some of it for yourself. The idea here is to get a good understanding of recent sales prices in the area where you want to buy.

This will help you in a couple of ways. It will save you time during the house-hunting process, by eliminating the need for repetitive research and pricing “sanity checks.” It will also help you make a strong, realistic offer backed by recent sales trends. And speaking of offers…

3. Make a strong and timely offer, backed by comparable sales

In a slow housing market, where sellers are ready to jump on the first offer that comes along, home buyers have the luxury of taking their time. A buyer might start off with an initial offer below the asking price, just to open negotiations. The seller would probably come back with a counteroffer or accept the first offer.

But it doesn’t work that way in a more competitive real estate market with limited inventory. In a tight market, buyers are better off making their first offer as competitive as possible. Otherwise, the house could go to a competing buyer.

4. Consider writing a love letter to the seller

A house love letter, that is! Recent studies have shown that buyers in competitive real estate markets can improve their chance for success by writing a heartfelt letter to the seller. Sure, real estate is a business transaction. But there’s a personal side to it as well. Writing a personal letter to tell the sellers what you love about their home might just tip the scales in your favor.

5. Get an agent on your side

It’s always a good idea to have help from a local real estate agent. It’s even more important in a tight market with limited inventory. An agent can help you move quickly, putting together a strong offer that’s supported by recent sales data. At NextHome Realty Select we are here to help you find your #NextHome. Call us today to learn more about how we can help you and your family.

Homes Expected to Sell Fast in 2018, Like Last Year

Homes Expected to Sell Fast in 2018, Like Last Year

A recent report showed that homes across the U.S. sold faster than ever during 2017. And experts believe that 2018 could be an even hotter real estate market, due to a chronically low level of homes for sale. So buyers should be prepared for competition.

A Fast-Moving Real Estate Market in 2018

Here’s the big message for home buyers and house hunters in 2018: Be prepared to move quickly when you find a house you want to buy. Nationwide, homes sold at their fastest pace on record last year. And this year could match, or even outpace, that record.

According to a recent report from the real estate information company Zillow, it took a median of 81 days to sell a home in 2017. That was nine days faster than the previous year. The fastest-selling month for houses was June of 2017 when it took about 73 days for a home to sell (including the actual closing process). Since it can take between four and six weeks to close a sale, this means the typical home was on the market for around 30 days, before going under contract.

Buyers Still Dealing With Limited Inventory

So here we are in spring 2018, and housing markets across the country are still red-hot. This is largely due to the dearth of inventory seen in many areas. Home buyers in 2018 are facing limited inventory this home-shopping season, which has been the case for the last three years.

According to the latest figures, housing market inventory across the country has declined on a year-over-year basis for 37 months in a row. This leaves fewer options for home buyers while boosting competition and prices. In 2017, nearly a quarter of all homes sold across the U.S. went for more than the list price. This shows that stiff competition could be leading to bidding wars and driving prices higher.

According to Aaron Terrazas, senior economist at Zillow, 2018 will be marked by fast home sales.

“As demand has outpaced supply in the housing market over the past three years, buying a home has become an exercise in speed and agility,” Terrazas said in a recent news release. “This [year] is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do.”

Tips for Buying in a ‘Fast’ Market

Fortunately, there are some things you can do to make the house-hunting process more efficient and to make your offer stand out.

  1. Here are five tips for buying in a competitive market:

  2. Review recent home sales in your target area, to get a feel for pricing.

  3. Work with an experienced real estate agent who knows the local market.

  4. Get pre-approved for mortgage financing to help narrow your price range.

  5. Move quickly with a strong offer when the right house comes along.

  6. Keep the big picture in mind; don’t quibble with the seller over “nickels and dimes.”

The fastest-selling real estate markets of 2017 were mostly located in California and the Pacific Northwest, where inventory is most constrained. San Jose, California; San Francisco and Seattle topped the list. But these conditions are affecting many cities and towns across the country, to varying degrees.

Spring 2018 Home-Buying Season to Be Marked by Low Inventory

Home buying activity tends to pick up in the spring, as more and more buyers shake off the winter chills and prepare to enter the real estate market. This year, the spring home-buying “season” will be marked by low inventory across much of the country. And that will keep things competitive for home buyers seeking a property to purchase.

42: Number of Months Inventory Has Declined

Inventory has been the big housing headline for the last couple of years. And real estate markets nationwide continue to contract, as demand outweighs the supply of homes for sale.

According to Danielle Hale, chief economist for realtor.com, inventory within the nation’s housing market has been dropping steadily for years.

“This year [2018] there is even less inventory than last year,” she told Forbes recently. “According to our February 2018 data inventory is down 8.5% from last February.”

According to Hale, housing market inventory (the number of homes listed for sale) has declined for 42 consecutive months. That’s nearly a four-year trend!

Granted, these are national averages. Housing trends and conditions can vary widely from one city to the next. For instance, larger metro areas tend to have more demand for housing, and often less inventory, than smaller surrounding cities. And the big tech hubs — like Austin, Seattle, and Denver — are among the tightest real estate markets in the country as we enter spring 2018.

Tight inventory is affecting sales volume too. “We expect little growth in sales in 2018, given tight inventories,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.

There has been an uptick in new construction permits nationwide. But it will be a while before this has any measurable impact on housing markets across the country.

According to Aaron Terrazas, as the senior economist at Zillow:

“New construction has showed signs of perking up, but remains well below estimates of demand. More importantly, builders face rising labor, materials and land costs making it difficult to build at a price point attractive to entry-level buyers.”

What It Means for Buyers and Sellers

For home buyers, these trends highlight the importance of working with an experienced real estate agent when making a purchase. An agent can help you navigate the local real estate market and make a strong offer in a timely fashion. This is the key to success in a tight, competitive housing market. And those are the kinds of conditions we are seeing nationwide, as we enter the spring home-buying season.

Sellers can benefit from the high demand and relatively low supply we are seeing right now. Under these conditions, homes tend to sell faster and for a higher percentage of the initial list price. Multiple-offer situations are also more common when housing demand exceeds the available supply.

All in all, it should be an interesting spring for the real estate market.

The Benefits of Staging When Selling a Home

Seller’s market conditions persist in cities across the country, as inventory continues to fall short of demand. Under these kinds of conditions, sellers typically enjoy competing offers from buyers.

But that doesn’t mean sellers should skimp on the home staging. By staging your house for buyers, you can increase the chance of a quick sale and a full-price offer. And those are good things!

What Is Home Staging?

Home staging is when you take proactive steps to make your house more appealing to the majority of buyers. “Majority” is the key word here. Some people will dislike a certain property no matter what kind of staging is done. Taste is subjective, after all. But there are certain steps you can take to make your property appeal to the majority of potential buyers. And that’s precisely what home staging is all about.

The staging process can include such things as:

* Landscaping the yard, when applicable
* Painting the inside and/or outside of the house
* Replacing outdated fixtures with modern ones
* Arranging, adding, or removing furniture to maximize space
* De-cluttering the entire house
* Cleaning the house thoroughly from top to bottom

In some cases, these kinds of actions might be unnecessary or even cost-prohibitive. For example, a new or recently updated home with modern fixtures won’t require any new knobs, sink handles, or light fixtures. But an older home with outdated fixtures might need extra attention (unless the fixtures are antiques that add charm).

What’s the Point?

Now you know what home staging is, and what it involves. But what’s the point? What can you get out of it, as a home seller?

As a seller, your mission is to sell your house as quickly as possible, and for the best possible price. Staging can help you achieve these goals and in several ways. It creates aesthetic value, which helps to support your asking price. It presents your home in the best possible light, which will make buyers more inclined to make an offer.

Above all, effective home staging helps you set your house apart from others that are listed for sale in the area. This is especially important in a crowded market with many similar properties for sale.

When buyers look at a well-staged home, they tend to say things like:

  • “I got a great vibe from that house.”

  • “I didn’t want to leave.”

  • “I could see myself living there.”

  • “The owners have taken good care of that house.”

  • “It seems nicer than the other homes we’ve looked at.”

This is the kind of mindset that can lead to an offer.

Home staging allows you to create a favorable impression in the mind of potential buyers. And these kinds of impressions tend to “accumulate” as the buyer moves through the home. So if you stack enough of them in your favor, you’ll have a much better chance of landing a strong offer. And that’s your primary goal as a seller.

How to Prepare for a Competitive Real Estate Market

How to Prepare for a Competitive Real Estate Market

Home buyers who are planning to enter the real estate market can benefit from having their financing arranged ahead of time. What does that mean exactly, and why is it so important in the current real estate market? Here’s what you need to know.

Many real estate markets across the country are highly competitive right now due to a lack of supply. There are plenty of people in the market looking to buy a home, but there’s not enough inventory to go around. This supply and demand imbalance puts upward pressure on home prices and makes things more competitive for buyers.

Mike Fratantoni, chief economist for the Mortgage Bankers Association, recently cited this as one of the primary factors influencing the market right now. “The major constraint in the market right now is the lack of supply,” Fratantoni told CNBC. “The absolute number of units on the market is near an all-time record low.”

Competing in a Tight Real Estate Market

In a competitive real estate market, home buyers want to have every possible advantage going for them. Among other things, home buyers can benefit from having their financing lined up ahead of time before they even start looking at houses.

This might mean one of two things, depending on your money situation:

  • If you’re planning to pay cash for a house, the seller will probably want to see bank statements proving that you have the funds in the bank.
  • If you’re like most home buyers, and you will be using a mortgage loan to help finance your purchase, the seller will probably want to see that you’ve been pre-approved by a mortgage lender already.

Benefits of Mortgage Pre-Approval

Mortgage pre-approval is basically a kind of financial pre-screening process. This is where a bank or mortgage company reviews your current financial situation to determine (A) if you’re a good candidate for a home loan, and (B) how much you can borrow. This helps you, the buyer, in two ways:

  • Getting pre-approved for a mortgage can help you narrow down your housing search to the kinds of properties you can actually afford, based on your financing. This will make your house-hunting process more efficient.
  • Mortgage pre-approval could also make sellers more inclined to take your offer seriously since you’ve been working with a mortgage lender already.

Both of these things could give you a much-needed advantage in the marketplace. This is especially important in an active real estate market where homes are selling quickly, and where multiple offers are a common occurrence.

The current inventory situation across the country also underscores the importance of having professional help from an experienced real estate agent. An agent can help you find a property that meets your needs, evaluate the seller’s asking price, and make a strong offer in a timely fashion. This is the key to success in a competitive real estate market.