In conventional housing markets in a traditional sales process, buyers look to make an offer on a home that is often below the asking or listing price and thereby negotiate a sales price somewhere in the middle with the seller. This tactic works in markets where inventories match supply and demand but in today’s red hot real estate market, buyers can’t count on offering the asking price anymore.
With home inventories in short supply, many homes are going at or above the asking price which means that as a buyer offering the asking price may not be enough. Here are some of our tips for making an offer in an inventory-shortened market.
A Different Day in Homebuying
We’ve already mentioned that the housing market has a significant shortage of houses. With different generations of Americans looking for their first home or to downsize from a larger home, multiple buyers in different demographics are vying for the same size of home. What this means is that demand is far outweighing supply in the housing market, and buyers need to be prepared to make a competitive offer.
According to the National Association of Realtors, homes in the current market are receiving almost 4 offers and homes are selling, on average, in 17 days. This is not only a very fluid market but it’s a significantly competitive one as well which means setting yourself apart as a buyer is crucial.
Set Yourself Apart
A lost art in the trade of real estate transactions is the offer letter. More often than not, buyers and sellers negotiate exclusively through real estate agents and have virtually no interaction with one another. Buyers rely (almost too much) on agents to take care of their business, but you can set yourself apart by doing a little bit more to stand out.
Writing an offer letter to a seller including the things you like about the home, attaching your emotions to their nostalgia, and generally being grateful, appreciative, and forward-thinking could be a key to getting a home in a tight market. Yes, your offering price is certainly a major factor, but how you plan on using the home, your future plans for it, and how important it is to your family can play a big part for sellers considering different buyers.
Present a Competitive Offer
Offering the asking price may not be enough in today’s market, so it’s very important that you’re prepared to make a competitive offer possibly more than the asking price. Bear in mind that because offers, sales prices, and appraisals may not match up one-to-one, there may be discrepancies between your offer price and appraisal.
This isn’t in any way disastrous or a deal-breaker, but it should be something you consider when it comes to your financing and down payment. In most cases, you will be responsible for paying any difference between the sale price and your appraisal, but that isn’t always the case.
To find out more about what your financing options are and how your offer could affect your mortgage, it’s important to get in touch with the experienced loan experts at Tidewater Mortgage Services, Inc. today!