The housing market is supposed to have cooled down. So why are there still bidding wars and homes selling for more than the asking price?
It’s true that the housing market has cooled down—tremendously—from the madness that permeated that desperate hunt for real estate during the COVID-19 pandemic. However, adorable, turnkey homes in desirable locations are still receiving multiple offers and often selling for a premium.
Opposite things can be true at the same time.
The run-up in mortgage interest rates thinned out the ranks of buyers. But the higher rates also scared off many would-be home sellers, many of whom are buyers as well. That’s resulted in many more buyers than there are properties for sale. So every time a move-in ready home with curb appeal in a good school district goes up for sale, buyers pounce. Those homes are selling briskly with plenty of competition.
What’s not selling nearly as well: homes that are eyesores, need some work, are in less popular locations, or are overpriced. Buyers either can’t afford or aren’t willing to pay extra to upgrade these properties. They’re grappling with significantly more expensive monthly mortgage payments, which are about 79% larger* than those of homeowners who bought two years ago.
So first-time buyers seeking a turnkey home in a great community need to have a strategy in place if they want to be competitive.
1. Know your local market
Forget about what’s happening in the national housing market. Focus on what’s going on locally. It doesn’t matter if home prices are falling in one region of the country if they’re rising in yours.
See how long homes are staying on the market in the communities where you would like to live, including those gorgeous turnkey houses. Are they selling for over, at, or under the asking price? Pore over the comps of comparable homes that have sold. Your real estate agent should know if this is a market where you need to waive contingencies and kick in a high down payment to have an offer accepted—or if you can ask the seller to cover your closing costs.
Having this information can help you to figure out how much to offer, what to ask for, and what you might need to concede.
2. Get pre-approved for a mortgage
I’ve heard countless stories of folks who just wanted to see what was out there and visit a few open houses before deciding if they wanted to buy a home. Inevitably, they fall in love with one of those properties. However, they haven’t been pre-approved for a mortgage, so they’re not sure if their credit scores are high enough to get a loan. So they lose the home to one of the six other offers the seller received from pre-approved buyers.
Save yourself the heartache and get pre-approved for a mortgage before you start attending open houses. This critical step will also help you home in on the price range that you can comfortably afford.
3. Find a real estate agent you trust
Your real estate agent is your guide through this unfamiliar, emotional, and extremely stressful process.
It’s important that you find someone you trust with helping you make what might be the largest purchase of your life—one that you might spend the next 30 years paying off.
Get recommendations from friends, check online reviews, and make sure they have worked with buyers in a similar price range in the areas where you’re looking. Make sure this is someone who you’re comfortable with spending the next few months, or however long it takes, to find a home.
If your agent pressures you to put in offers on homes that you aren’t sure are right for you or offer more than you can afford, or simply doesn’t take your concerns seriously, find someone else.
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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
