How To Navigate a Hot Housing Market
If you’re dealing with the current housing market in any capacity - we feel for you. It’s like the wild wild west out there! Homes going in less than 24 hours, hoards of people waiting in lines to see open houses, people going thousands over asking price, and just more insanity - in a pandemic no less!
It’s hard to know how to progress during this chaos, and it is definitely an overwhelming time in Real Estate for buyers, sellers, and agents alike. But y’all, we’ve been at this for a minute now - so we’ve got you! No matter what journey you’re on, we can help you figure out the best moves to take what this market is giving you and even use it to your advantage! The following tips will walk you through your best options to navigate this market whether you are trying to sell your home or buy one.
BUYERS
Whether you’re buying your first or third home, this market can be stressful if you don’t understand it. And for you first time buyers out there - there is a very good chance you feel in over your head - and we get that! You saw your friends buy a few years ago, and they didn’t have to deal with half the things you are seeing now. Sure, you’re likely getting the better deal with the interest rates, but besides that, you are far from smooth sailing.
So let’s talk about options to help you land that home! We know some of these options may feel uncomfortable, but it’s a heck of a lot better than bidding on numerous homes and losing every single time. You deserve to know how to win! And these tips can help you get there:
Increases to price:
This may seem super obvious to you but also a bit vague. Not knowing how much to offer is currently every buyer's issue. One pricing tip we are currently suggesting to clients is to look for homes around 15-25% below your max budget. Why? Because that’s how much higher you will likely need to go over asking price. That being said, we have seen offers go over and below this percentage. What you feel comfortable offering will truly depend on your own financial capability. But at this moment no offers are being accepted at or below asking price. We know, we know… ugh.
No matter what you decide, just make sure that the monthly payment won’t break the bank. I recently made an offer on a home that was almost $100K over asking. You may be thinking “she’s crazy!” BUT my monthly payment is going to end up being very reasonable. You see, I will be using an investing strategy in which I won’t be paying the majority of the monthly payment. It’s a great investment for my current wants and needs and will still bring me a significant return on my investment.
Another buyer tip to consider is often lenders will let you change your down payment percentage after you go under contract! In the current market, most of the people snagging homes are not only increasing their purchase price, but also increasing their down payment percentage. If you have the option, you can increase your down payment amount to show the seller you’re a “strong buyer,” all the while having the option to change it later.
For example, you may have around 20% saved for the purchase of a home but only planned to use 10% of it for a down payment. The rest of it was going to be saved for possible renovations. You may have your realtor write up a contract showing you have 20% but then later can change the downpayment back to 10%. Cash is queen in a seller’s market so showing you have it may put you at the top of the competition. PS: obviously only do this if you actually have the cash!
Strong Seller Terms:
Buyers with winning offers often have super favorable seller terms, at the buyers expense. This could mean waiving some of your contingencies or even paying for extra costs usually paid for by the seller. As a company that works with mainly first time buyers & investors, this is not the best time for us. BUT we are here to remind you that if you are treating your home as an investment in any way whatsoever, we know you can successfully buy in any market. We are still creatively buying homes ourselves through the Open House way.
Having favorable seller terms means that it will make it harder for you as a buyer to back out of the contract. I’d definitely be prepared to have great seller terms right now but I can’t stress how extra crucial it is that you’re working with a super knowledgeable Realtor through this process. They will be your extra set of eyes and ears when you walk through a home for the first time. You NEED this! They will help point out any red flags to keep an eye on and you’ll feel much more confident with stronger seller terms. If you’re in Austin, our expert team of Realtors are here to help you with this and if you are not, no worries we got you as well!
Flexible Dates:
The seller may have some specific dates in mind that could influence the sale of their home. If you are willing to be flexible with dates, this could definitely increase your chances. By offering the seller’s ideal closing date (have your agent ask), offering a seller leaseback, or even offering a shorter contract-to-close period could really help your chances. For example, we recently had a client win an offer who not only went 20% over asking but also gave the seller a free 2 week leaseback and gave them a closing date they wanted. So, the seller was able to sell their home and get the money from the sale and continue living in their home for 2 weeks after the sale.
HOMEOWNERS
If you’ve been even considering selling your home, now may be the time! Many of you may have held back because of the fear of strangers walking through your home every day. You may fear your home potentially sitting on the market for weeks or even months. Also then you’d have to look for another place to live?! All these unknowns sound very unfun - especially during a pandemic. I get that and have put off selling for the same reasons. But if this sounds like you, this may be time to look into your options for selling. This may be your one shot to have your cake and eat it too!
If you’re curious as to what your options are and around how much you could get for your home, you need to talk to our specialized real estate team here in Austin. If you’re not in Austin, no worries! We have a network of like-minded Realtors all over the country that can help you navigate the process seamlessly. But if you work with us, we will go over something called a “net seller sheet” with you to show you exactly what you can expect to earn from your home when you sell. We can also give you an analysis to show you when we could list your home and when it would sell so you can start to make some plans.
REALTORS
A trend we are also seeing in this hot market are buyers blaming their Realtor for losing out on offers and generally a lack of respect for their agent and their time. Remember, as a buyer, your Realtor does not get paid until you close on your home. If you hire right, your Realtor is truly trying their hardest to get you what you want. But at the end of the day, you can’t always beat out other offers. In super hot markets like Austin, top-rated Realtors are writing up 3 or more offers at once for their client and not getting any accepted. You need to be patient and learn as this market ebbs and flows.
Earlier I mentioned working with a competent Realtor is key and, especially in this market, I stand by that! Before you hire a Realtor, you should read reviews and make sure they come highly recommended. I feel horrible for new agents out there right now and for your friend who just got their license, but unless they have a lot of mentorships, this is truly not the time to work with a newbie. That being said, please please please do NOT waste an agent's time. Do not view 10 homes with one Realtor to then quickly jump ship and see another 10 homes with a different Realtor. This is their livelihood and they are small businesses as well. I know it can feel like a crazy-chaotic time but do not let that affect your moral standards.
During this time, for our Austin community, we will be hosting recurring “State of the Market” webinars to keep you all informed about what is happening locally with real estate. Remember, whether you have questions around buying, selling, or investing, know that we are here for you! We understand how scary all of this can be and that’s exactly why we created Open House. Real estate education and empowerment is our bread and butter and we strive to continue to come up with ways to make real estate more accessible.
PS: Some of you may leave here wanting to dive even deeper into tactics to make your offer stronger in this market. Don’t worry you’re in luck! For all of our buyer clients we have created “21 ways to strengthen your offer” PDF which will dive even deeper into the best tactics to beat our competing offers. Want to talk to an Open House agent? Set up a call here!
