Facing a shortage of inventory across the nation, many home buyers find themselves in bidding wars. The topic of real estate is very relevant and it seems most people are aware of just how insane the real estate market is! I am speaking from my personal experience as a licensed agent in the West Michigan area. It is definitely a seller’s market here and you may be experiencing the same in your immediate area. As soon as a listing hits the market, it has multiple offers, and it goes pending! Multiple offers is actually an understatement, there are a plethora of offers! Buyer’s agents are pulling out all the stops and putting their best foot forward to secure the perfect home for their client. Seller’s agents must know the market in order to price your home perfectly to attract buyers and inevitably bring in multiple offers. Most times having to enter the offers into a spreadsheet to keep them organized in order to present them to the seller.
One extremely important factor to consider is the team you have representing you. Your lender and real estate agent should have knowledge and experience of the market and industry, know and care about your wants and needs, and have an outstanding reputation for building incredible relationships across the industry. They will work hard for you, fight for you and have your back while doing their best to protect you through one of the biggest investments and decisions of your life. The bottom line is, whether you are selling your home or looking to buy, having representation from a licensed real estate agent is 100% the way to go!
There are several advantages and disadvantages to listing your home in a sellers market.
Advantages:
- Getting TOP Dollar! Prices are high and people are willing to pay. So much so that agents and buyers are coming up with several clever ways to have an edge over other offers. One way of doing this is to pay the gap/difference between purchase price and what the appraisal comes in at. This means paying the difference out of pocket if the home appraises for less than their offer. This is not an option for a lot of first time buyers.
- Extended occupancy time after the closing. In the past, in a “normal” market, buyers were given keys or immediate access to the home. It has become such a sellers market that giving up to 30 days or more at no charge is yet another way to entice the sellers to consider their offer.
- Closing costs. There was a time where it wasn’t unusual for buyers to ask sellers to contribute a portion of the buyers closing costs and prepaids. Today being a sellers market, buyers may offer to cover a portion of the sellers closing costs.
Disadvantages:
- Hard to turn around and buy something else in a seller’s market.
- You will be buying high even though you received top dollar for your home.
- You will most likely be competing in the same multiple offer scenario that got you top dollar.
There are several other simple, yet attractive terms to consider writing in your offer to make it stand out. The things that are in your control use those areas to come in as strong as possible.
If you are experienced with buying and selling homes or are an investor, waiving a home inspection might be the way to seal the deal. However, if you are a first time home buyer, I highly recommend a home inspection. That home inspection, if done by a trusted, experienced inspector, can either put your mind at ease and confident in your purchase or save you from buying a money pit! The few hundred dollars spent is worth every penny but in multiple offer situations it can make or break the deal.
Other things that are not in your control such as type of financing and how much cash you have on hand can put you at a competitive disadvantage. Certain loan types give you a favorable interest rate, require less down payment and have other appealing features, but if you are restricted to perhaps an FHA loan, that means that cash or conventional loans may have an edge over your offer. There are other things that you can improve on such as your credit score or accumulating more cash on hand so you don’t have to ask the seller to contribute toward your closing costs.
The market is hot right now but my best advice for a buyer is, be patient, find and trust your team, and no matter how frustrating it is, remember you are not alone! You know that behind ALL those offers you were competing against, they are buyers just like you. Hang in there. If you are someone considering selling, please reach out to a real estate agent experienced in your local community and help these buyers and their realtors out by getting your home on the market!