During much of 2020, multiple bidding wars frustrated vast numbers of wannabe homebuyers. Yet such real estate wars are expected to be even more intense in popular neighborhoods during the upcoming springtime selling season.
“This has been the frothiest market I’ve ever seen,” says Glenn Kelman, the CEO of Redfin (redfin.com), a national realty brokerage. To illustrate, he tells how in many areas, eager buyers are bringing lawn chairs and lining up outside open houses.
The obvious root of the problem is that buyer demand for properties is outstripping supply.
“Home price growth and time on market show the effects of plenty of buyers and not enough sellers. Prices are rising, and homes are selling faster,” says Danielle Hale, the chief economist for Realtor.com, the home listing company.
Aaron Norris, a longtime real estate analyst and investor, expects buyers to face a fiercely competitive market throughout the country in coming months.
“Spring will likely be hot, and the Biden administration seems determined to throw fuel on the flames. Discussions on forgiving college debt and a first-time buyer tax credit of $15,000 could help get an entire generation into homebuying in a market already tight on inventory,” says Norris, a vice president at PropertyRadar (propertyradar.com), a data analysis firm for real estate investors and brokers.
Norris urges those hoping to buy a property early this year to get a jump-start on rival purchasers and not wait until spring is in full bloom.
“You have to realize that buyers will be coming out in droves this spring. So, get all your ducks in a row right now and start looking,” he says.
What can buyers do immediately to increase their odds of scoring the purchase in a high-demand area? One step is to establish a relationship with a mortgage lender who can make sure they’re pre-approved for a purchase.
“You might as well get your 2020 taxes done now. Anyway, you’ll need your W-2s and likely also your tax returns when applying for a mortgage,” Norris says.
Here are a few other pointers for hopeful buyers:
-- Search for sellers in a rush to move.
Dorcas Helfant, a former president of the National Association of Realtors (nar.realtor), says the owners of upscale homes are no different from any other category of owners: Some are much more driven to sell than are others.
Some owners have no particular timeline that’s drawing them forward. Such “discretionary sellers” would like to liquidate their properties, but will readily defer their plans should they be unable to obtain the price they want.
In contrast, motivated sellers have well-defined reasons for moving. Life events such as divorce or job changes are commonly behind the need for a quick sell.
Sellers in a rush are more likely to negotiate in earnest.
Often, a home’s owners will indicate openly what’s prompting them to sell -- or they’ll permit their listing agent to do so. Alternatively, your agent can often learn more about the sellers’ circumstances or timing through polite inquiries.
-- Consider listings that have sat unsold for a lengthy time.
Sometimes truly motivated sellers hold out longer than they should, discounting their overly high list price only after they’ve become desperate.
“Sellers usually get a wake-up call after they’ve had no showings in a month or so and their denial on price has worn off,” Helfant says.
In neighborhoods where the supply of available homes is less than demand, a few sellers will still cling to an over-market price until their property becomes stigmatized.
“Even fabulous homes in excellent condition can linger unsold for weeks. Buyers who wait until deep price cuts occur can be richly rewarded for their patience,” Helfant says.
-- Attempt to improve your odds with a personal letter.
Those trying to buy in the current frenzied market often face stiff competition for properties that are well located and fairly priced. No one wants to lose a place to other bidders. But to outdo rivals, it’s not always necessary to offer the highest price.
Norris says sellers sometimes respond favorably to a personal letter attached to an offer.
“Tell the buyers how much you love their property and would enjoy living there. Also tell them about plans to raise a family in the house if that’s your intention. With so much loneliness during this pandemic, a handwritten letter practically brings tears to people’s eyes,” Norris says.
He recalls that when selling a 5,000-square-foot house, his father was swayed by such a letter from a young couple with a 10-year-old son. The parents weren’t the highest bidders, but they still prevailed because of the personal touch.
“My father fell in love with this family and their dreams. He was willing to sell for somewhat less because he wished to help them fulfill their plans,” Norris says.
-- Stay focused on your end goal.
Getting a good value is always a positive in a home-buying situation. But especially for those who expect to hold a place for more than five years, it can sometimes be worth a slightly over-market bid to outdo others for a place they truly love.
“If the property you’ve found is exceptional and really meets your long-held desires, it could be wise to offer a small premium,” Helfant says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)