In the past few years following the market crash, many properties, the good -and the neglected- have been gobbled up by savvy buyers and investors. The others, still licking their wounds from their personal economic woes, but ready to stand up and jump back into the game, are finding the market a little different than they thought or hoped. You see, inventory is dropping and prices are rising. The amazing downtown bungalow that, aside from needing some new carpet, was move-in ready, is no longer available at a steal. The property now reflects growing market trends, and some salivating buyers are seeing fewer options in their price range.
In a recent article by Reuters, “single family home sales have held near 2-year highs while prices have hit their highest level in 5 years. Compared to last year, August, new home sales are up 27.7%. Last month, the median price of a new home increased a record 11.2 percent to $256,000 — the highest level since March 2007. Compared to August last year, the median sales price jumped 17 percent, the largest rise since December 2004. The inventory of new homes on the market held near record lows last month. At August’s sales pace it would take 4.5 months to clear the houses on the market.”
A stabilizing economy and low mortgage rates have allowed many the new joy of home ownership. However, as inventory is dropping and the sellers’ market emerges, buyers need to be prepared for the entire process. Timid buyers, by the time they dip their toes to test the water, will see their favorite home options quickly ripped away by experienced sharks with more aggressive offers. How can a buyer be prepared?
First, a buyer must get a pre-qualification from a lender. Knowing exactly what you can afford will not only deter falling in love with a home out of financial reach, but a pre-qual is very favorable in submitting offers. Sellers like to know that their potential buyers are financially able and will not waste time dealing with shaky financing.
Second, buyers should seek an experienced REALTOR to guide them to their dream home. Their resources, knowledge, and experience is invaluable in the process. Keep in mind, however, that your agent should be helping you find a home…not selling you on a home.
Third, when the perfect home is decided on, be prepared to provide a solid offer. While throwing out a lowball offer to “see what happens” isn’t the best use of anybody’s time, price isn’t always the deciding factor. Sellers, especially in multiple offer situations, like to see as few contingencies as possible. Most sellers would rather accept a contract for few thousand dollars less on asking price than a full-price offer contingent on the sale of an existing home or something else that would put the closing table far off into the distance.
So, again, the question asked is “to buy? or not to buy?”
There is no question.
Prices are rising and homes are selling fast. The time is NOW to lock in on record low rates while prices are still relatively low.
Are YOU prepared? Now THAT…is the question.
Article written by Michael Leanna