Reality Check In Today’s Real Estate Market
Let’s talk about the current market. I’m sure you’ve heard that it is still a crazy competitive seller’s market out there due to lack of inventory. Well, what does this mean for you as a buyer? As a seller? And the market in general? We are about to dive right in and give you our thoughts.
Inventory is at a record low right now. According to the Livingston County Association of Realtors market update for January 2021, Inventory is down 61.1% compared to January 2020. Low inventory means more competition, less houses for first time home buyers, less houses to choose from for seller’s after selling their homes, and increased prices.
If you are a seller in this market-there are definitely some pros and cons. Pros-most likely you’ll have a ton of showings, multiple offers, and offers over your asking price with terms like appraisal guarantees, shorter inspection time frames, maybe inspection waivers, and buyers willing to do whatever it takes to get your house. Cons-you sell high, you buy high. And with much less inventory to choose from.
In opposition as a buyer, it is probably the most frustrating time to buy a house. You are in competition with many others for every house you are looking at, there are no “deals.” You’re paying a premium-many times agreeing to pay out of your own pocket above what a home appraises for and most likely not getting any buyer benefits such as seller concessions or the ability to really negotiate if inspection issues come up, etc.
Our motto is that we want to be your “Realtor for life,” which means that we are not here to just make a quick sale or a paycheck. Team Hamilton genuinely wants to help each buyer and seller make smart real estate decisions that will put you in a good position in the long term. Which is why we want to bring a few things to your attention.
First, determine if now is truly the right time to buy or sell. If you are a seller…do you HAVE to move? Where will you go? And what is your financial objective? If you decide you want to take advantage of this seller’s market and sell your house while the market is up, we encourage you to think about the next step as well. Figure out where you will likely be going BEFORE you list your house. This is extremely important because if you put your house up for sale, accept an offer, and closing is in 30-45 days and you still haven’t found your next house yet, this is an issue. There are a lot of things that will be affected down the line if you are approaching closing and still have no where to go. There is no guarantee a buyer will extend occupancy or agree to buy your house “subject to you finding the home of your choice,” especially in this highly competitive market. If you determine you are going to hold off on purchasing another house, and are going to rent short term, make sure you have an apartment lined up or a home to lease. Many times, there are waiting lists for apartments and homes to lease are far and few between. If you have somewhere to stay for free such as a family member’s home and are in no rush to purchase your next place, you are in a great position. Just make sure you can stand living there in case you can’t find somewhere soon 😊
Second, as a buyer, think about the entire picture. Don’t just “buy, to buy.” What we mean by this is, just because there is a lack of inventory, don’t just purchase something because that is the only thing out there right now. Don’t compromise on what you truly want because of this crazy market. In addition, the strategies out there right now are creative and may get you the home over the other 20 buyers who want to buy that same home, but think about how those terms in your offer will affect you down the line.
For example, appraisal guarantees. This is a concept that we are not a huge fan of and want our buyers to be weary of. If you decide to go this route to help sweeten your offer, just be careful with how much you are willing to guarantee and try not to get too crazy due to the excitement of “beating out” the other buyers. Remember, the market will not stay like this forever. We want you to realize that if the market does change to a buyer’s market and prices drop, you could potentially be upside down and have paid more than your house is worth. What if you have a major life event in a few years like an illness or a job loss and now you’ve paid way more than that house was worth and you are struggling to make those payments or could have used that extra cash for a rainy day.
Another strategy we have heard agents encouraging people to take advantage of is waiving your right to an inspection. We never advise this and will always encourage you to do your due diligence as a buyer. This is your right to get a base line for the home and discover any major items that may be red flags or need to be addressed. A lot of liability is involved as well so as a seller we might be cautious of accepting a buyer’s offer with these terms as well.
Due to lack of inventory, many agents are calling expired listings or sending letters to neighborhoods to generate new listings. We urge everyone to just be a little cautious as well. If someone is claiming they have a buyer for your home…get proof. Don’t just let people into your home. Make them walk the walk not just talk the talk and waste your time. If they truly had a buyer-and your home is an expired listing, where was this buyer when you had it listed on the open market? Make sure the buyer is pre-approved with a lender and truly has the funds to purchase your home too.
Lastly, we want you to realize we are here to help you make informative and smart real estate decisions. We have a duty to represent you professionally and ethically and we will do so. If you have any questions regarding this market or questions about strategies to help you get a home in this market-that will be a great decision down the road as well, don’t hesitate to reach out and we can discuss what would be right for you.