If you’ve watched the real estate market over the past few years, then you know that inventories for existing homes have been and are becoming increasingly smaller. Homes that fit the bill of both starter homes and retirement homes are being fought over by two different demographics of buyers which makes for an interesting, albeit stressful, market if you’re looking to buy.
Another–hopefully temporary–caveat to the story is that materials prices have skyrocketed in the past few months due to a year-plus of Covid-related shutdowns to plants, mills, etc. that account for both raw materials and manufacturing of commonly used building materials. This spike in prices means that building new homes may very well be put on hiatus at least for a few months and possibly longer.
With so much going on, we’ve put together a quick guide on how to navigate the low housing inventory.
Be Aggressive and Proactive
Today’s bipolar housing market falls very much within the confines of conventional supply and demand. Unfortunately for buyers, this is a seller’s market as demand is high and inventories are low. Knowing that, understand that it’s important to be aggressive (within reason) and proactive when it comes to buying a home.
What we mean here is that you should be prepared to–at the very least–offer the listed value for a home and potentially even more as long as it doesn’t get you in a bind financially. Additionally, be proactive when making offers and be willing to put more than you would have otherwise planned down as earnest money. Doing one or both of these things will show sellers that you mean business and you’re more than willing to make sacrifices to purchase their home.
While being aggressive and proactive are great ways to get in the door for an offer, be flexible throughout the process. Sellers are likely more than willing to work with a buyer who truly desires the home they’re listing, but when it comes to the business end of a real estate transaction stay as flexible and fluid as possible to make sure nothing gets hung up in the process.
By and large, make sure that you’re ready for closing quickly on a home. With the boom to the mortgage refinancing market as well as new mortgages, you’ll likely see several days to several weeks before you actually close, but that doesn’t mean you can relax during that period. Make sure that all of your ducks are in a row, all of your financing is secured and underwritten, and have all of your business taken care of in advance of closing.
Landlords, while accustomed to reeling in regular monthly rents, aren’t immune to the housing shortage themselves and may be willing to part with regular rental income in favor of a cash buyer or buyer with financing in hand.
It’s not a bad idea to peruse your local area for “for rent” signs and make contact with local landlords or property managers looking to possibly offload some inventory in order to have cash in their pockets so-to-speak. There’s nothing wrong with this practice, and you may be surprised to see what sort of inventory can turn up when someone genuinely wants to buy.
Don’t Hesitate on Financing
In a low inventory housing market, every point counts. This means that most sellers are looking for cash buyers first, but with a proper presentation and financing that’s already in hand, you can be equally competitive with a cash buyer if not more so. Get your financing in order before you start shopping by talking to the loan experts at Tidewater Mortgage Services, Inc!