How Buyers Can Up Their Chances in a Thawing Housing Market This Spring
Affordability and inventory remain an issue as the market recovers from the pandemic.
The pandemic-fueled home-buying turmoil is over, but buyers hopeful of purchasing a home shouldn’t expect a super easy process.
Potential buyers are now entering an improved market where bidding wars are not as common and homes are staying on the market for much longer. Recent statistics show that in January, numerous homes nationwide were on the market a median 51 days. This is an increase of more than three weeks from a exactly a year ago, according to Redfin.
For those dabbling into the market as this spring selling season commences, don’t be so quick to make concessions. Agents said that the days of waiving home inspections are gone and hopeful buyers should be prepared for the home buying process to move quickly and to possibly make offers on homes that aren’t currently listed.
Here are three strategies for how buyers can increase their odds of owning a house this spring:
Consider reasonable concessions
Given that the market has eased up, buyers should find out what the seller’s pain points are and see how they can address them. Price is generally at the top of most sellers’ lists, but there are other ways to make an offer attractive, he said. If a seller has an open permit on a home renovation, the buyer might offer to finish the job.
Check with your local agents to understand what type of concessions are appropriate in your market as it may vary by ZIP Code. Concessions such as money for home repairs can be the key to getting a deal done. Buyers received concessions in 42% of home sales in the fourth quarter, up from 31% a year earlier, according to Redfin.
Line up financing
Cash offers and strong financing often win out over higher offer prices for homes. Buyers should aim for a down payment of at least 20%. While a cash offer is king for a buyer looking to play hardball, for many, it isn’t a viable option. Thankfully, some lenders offer programs that enable a buyer to become fully approved before an offer being made.
This can be very appealing to a seller over a simple pre-approval letter that hasn’t gone through the lender’s underwriting process. These types of programs are usually available at banks, and not only have a high rate of closing, but also reduces the chance of the contract falling through.
Dig up old listings
If buyers can’t find what they want on the market, it’s possible for their agent to inquire with owners who took their property off the market this fall, Zillow listings show when a home might have been previously listed.
“Consider homes that have sat on the market for more than two months and offer a discount”, said Lawrence Yun, chief economist at National Association of Realtors. “For instance, a home initially listed at $500,000 will get sold roughly at a 10% discount ($450,000) after 60 days”, he said.