My head and my heart are on different plains today. My head knows the facts,…
Guys, it’s February 11th and the market is heating up already! Superbowl weekend is here and the games have begun. In fact, they have been in full swing for the last 4 weeks. Mortgage purchase applications are up another 3% week-over-week even with interest rates popping back up. As the real estate market heats up and more buyers enter the market, inventory of available homes for sale may not be enough to satisfy increasing demand. As a real estate professional, it’s important to advise home buyers on how to position themselves for success in the upcoming competitive environment.
Here are eight strategies buyers can use to succeed in a tight market:
1 Get pre-approved: In a competitive market, buyers need to move quickly. Being pre-qualified is okay. Pre-approved, better. Fully underwritten with the Rueth Team 8 Day Close and Earnest Money Guarantee, the best! Add to that our ability to determine if an appraisal waiver is available before submitting the offer! This allows a buyer to make an offer right away and show sellers they are serious and financially able to complete the transaction swiftly and securely.
2 Work with a real estate agent: This should be as obvious as working with a strategic lender 😉 but sometimes it too can be undervalued. As internet searches make it super easy to do your own sleuthing as a buyer, they miss the hidden gems. An experienced real estate agent can provide valuable insights into the local market and help buyers navigate the buying process. They can also help buyers find properties that are not yet on the market or mistakenly misrepresented on the MLS giving them a competitive edge.
3 Be flexible with search criteria: This could mean considering homes that need a little work, looking in alternate neighborhoods, or considering different types of properties. Renovation loans require only 3% to 3.5% down of the “After Repair Value” allowing you to get exactly the home you want and need. Add an ADU (Auxiliary Dwelling Unit), redesign the kitchen, create a backyard oasis. All possible with a little creativity!
4 Be ready to act quickly: When the perfect property is found you need to be prepared to act quickly. This means having financing in place and being prepared to make an offer. Knowing what is most important is critical… i.e. what are the wants, needs, and must haves. Inventory will stay tight in 2023 as 70% of Gen X and Baby Boomers ages 45 to 76 plan to or have retired in the home they already own. Add to that 86% of mortgaged homes are locked in under 5% and 40% of homes don’t even have a mortgage. “inventory shortage” might be an understatement.
5 Consider a larger down payment: A larger down payment can help an offer stand out in a competitive market. Sellers are more likely to accept an offer from a buyer who can put down a larger down payment, as it reflects a higher commitment to the purchase. Being able to put more down might also provide more alternatives for better lending solution. Especially since Denver’s conforming loan limit was just increased to $787,750.
6 Be prepared for a bidding war: In a competitive market, buyers could easily find themselves in a bidding war for a property. In fact, we were seeing multiple bids at the very beginning of January even when they were all below asking. Now, in February, those bids on homes priced right and staged well are already going for over asking. Be prepared for this possibility and consider setting a maximum bid before entering negotiations.
7 Stay on top of new listings: In a tight market, new listings can come and go quickly. While we were seeing extended days on market over the holidays, new listings in January moved fast. In fact, in the DMAR 11 county area there were only 2,858 new listings with 3,339 homes went under contract. Buyers should keep an eye on new listings and be ready to act quickly if they find a property that meets their criteria.
8 Be patient: Grandpa always said, “Patience is a virtue”. Finding the right home in a competitive market can take time. Don’t get discouraged if you do not find the perfect property right away, but instead keep looking and stay optimistic. Because ultimately real estate is a long game.
Positioning for success in a competitive market requires flexibility, preparedness, and patience. By having an A Team (real estate agent and lender), staying on top of new listings, and being ready to act quickly, buyers not only increase their chances of finding and securing the right property, they will have successfully started they journey to building financial stability through real estate.