Spring is typically the busiest time of year in the real estate market, but the spring of 2020 upended all the usual patterns in the housing market. After a brief pause on sales activity, the residential real estate market heated up and never cooled down. High buyer demand and limited homes for sale are anticipated to collide again this spring.
In an indication of the hot housing market, homes sold in a median of 11 days in January, 15 days faster than in January 2020. Regionally, prices rose nearly 10 percent in January compared to January 2020.
Active listings, which refer to all homes on the market, totaled 4,600 in January, well below the five-year average for the month of 5,937. The DC area has about a one-month supply of homes, meaning that if no new homes came on the market every property would be sold within 30 days.
Homebuyers need to be ready to compete for the limited number of available home available and below, Bright MLS highlights some important tips, so that they can do just that.
8 Tips for Competing Homebuyers
Ideally, buyers hope to find a property on the market before anyone else and to have their offer accepted easily by the seller. However, every buyer should be prepared to compete for a home they want in this market. Some of these techniques can help:
- Choose a proactive professional real estate agent. Make sure you choose an agent who will actively seek out homes for you, help you expand your search and identify potential buildings or neighborhoods to watch.
- Choose a lender with a reputation for closing loans. Sellers and their agents are more likely to strongly consider an offer when they know the lender or the mortgage company will work hard to make sure the loan goes through on time.
- Be financially prepared to make an offer. Before you search for a home, have your earnest money deposit and down payment funds in an accessible account. Have a pre-approval letter that has been underwritten by your lender that can be presented to sellers or their agent.
- Be ready to see a property and make an offer quickly. Be as flexible as possible to tour homes as soon as they are listed. Many get offers immediately or within days or even hours of going on the market, so buyers don’t have much time to wait to see it or to mull over whether they want to buy it.
- Consider home inspection options. Sellers with more than one offer may not want to accept an offer that requires a home inspection with the ability to negotiate on flaws in the property. If you have time, schedule a pre-offer home inspection so that you can waive the inspection contingency when you make an offer. Alternatively, you can request an “information-only” inspection that gives you the opportunity to rescind your offer if you find a major flaw but doesn’t allow negotiations on minor issues.
- Offer flexible closing terms. Buyers can offer to settle the sale quickly, delay the closing or to rent the property back to the sellers after the closing to ease their transition to a new home.
- Consider an escalation clause. Most sellers want to see your best offer from the beginning, but if you’re competing against other buyers, you can also offer a specific dollar amount or percentage above the best offer the seller receives. Be careful to set a limit for the escalation clause so you don’t pay more than you can afford.
- If you can’t find a house you want to buy, take a look at the old listings on the MLS that have been on the market for 60+ days. The seller may have misjudged market demand in the beginning and either didn’t prepare their property for sale, or over-priced. Other buyers may be missing a gem by just going after the shiny new listings, so don’t think this is picked over inventory. You may find a diamond in the rough on the MLS by looking at some of these older listings.
If you find yourself in a bidding war, try to keep your emotions out of the negotiations to avoid overspending. It’s better to be forced to wait to buy a home than to get stuck with an unaffordable housing payment, especially if the property isn’t exactly what you hoped to buy.
Written by Jon Coile, Chairman, Bright MLS Board of Directors, and VP - MLS & Industry Relations: HomeServices of America
See other articles related to: bright mls
This article originally published at https://dc.urbanturf.com/articles/blog/how-to-prep-for-a-competetive-spring-market/18046.
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