We are in a changing real estate market – low inventory and higher demand has pushed the spectrum to a sellers market this spring. Because of this, buyers need to shift gears as the market continues to evolve beyond early spring. The same forces that have created this lack of inventory are going to continue to make things challenging for buyers throughout 2013 and into 2014 if they don’t adapt. If you’re buying a home in the next year or two, here are a few considerations:
1. Time – this is going to be the biggest factor between success and failure. You’re going to have precious little time to view homes and make a choice before they’re gone. That means partnering with a buyer’s agent up front and getting daily listings. You absolutely will not have time to cruise Zillow and Realtor.com for homes then contact an agent and set up the showing. Due to the lag on these sites, those homes will be sold by the time you can get into a position to see them. You need to be prepared to see homes the day they hit the market and be ready to write offers on the ones you want the same day – we’re not in a market where you can take a week to “think things over”.
2. Advanced Preparation – because time is limited in this market, you need to have done all of your prep work in advance before you go see homes. This has always been important but now it’s absolutely vital. You simply will not have time to scramble for a pre-approval once you find the home. It will be gone before you can make a legitimate offer. If you’re paying with cash, you need to have a properly formatted proof-of-funds letter – having your letter rejected by the sellers – particularly in the case of foreclosures – can cost you the home.
3. Making Yourself a Priority Buyer – there are currently fewer real estate agents in the business now than there has ever been. Because of increased buyer activity we’re all as busy as we can possibly be. That means we’re budgeting our time to work with the buyers who are the most prepared to buy. Frankly, buyers that are still smelling the roses or aren’t doing what needs to be done in this market are finding it difficult to find an agent who will take them seriously. Now, it’s important to put yourself in a position to be prioritized by your agent. That means partnering with them earlier in the process and developing a relationship, having all of your prep work done and requesting showings early.
4. Offers – we’re no longer in a market where a lowball offer is going to fly. The reasonably-priced homes are selling with multiple offers and the overpriced homes aren’t really in the mindset to entertain lowballs in the first place. Homes are selling much closer to list and in some cases, well above list. Lowballing in this market is really counterproductive – it just drags the process out to the point where another offer hits the table and then everything goes out the window. Negotiation needs to be short and quick – plan to arrive at your price within one round of counteroffers or two at the max.
5. Moving on From Failure – even with the best preparation and working with the best agent, you may lose a home or several. With multiple offers being the norm in this market, luck plays more of a role. If you try for a home and come up short, it’s important to move on quickly to the next home. Don’t let despondency divert you from your ultimate goal of buying. Spending time comparing homes to “the one that got away” will only keep you from pulling the trigger on the next nice home that comes along.