They say it’s “Spring,” but I think someone forgot to tell that to Mother Nature. One thing that has certainly been heating up of late however is the real estate market. Notwithstanding of my “cheesy” intro, the 2018 spring buying season is expected to be one of the most competitive in years, and even more vigorous than pre “Great Recession” levels.
Across the country, many housing markets are seeing a record low number of homes up for sale. While many homeowners are actively considering selling their home, they too are faced with fewer purchase options and higher home prices, which is giving them pause. Those on the fence about selling may even be swayed by a Realtor to list at a much higher price than expected in an attempt to gauge the market and potentially get a unprecedented offer. These tactics only perpetuate the vicious cycle fueling rapid appreciation in home prices, all while burdening local markets and making homebuying less affordable.
The inimitable dynamic of limited-supply with a surplus of demand is causing anxiety and apprehension to many would-be first time home buyers. “As demand has outpaced supply in the housing market over the past three years, buying a home has become an exercise in speed and agility,” said Zillow Senior Economist Aaron Terrazas. I received a call from a woman this week who was told by a Realtor in her area that there is already a list of over ten homebuyers who are ready to buy her home and are willing to write up a contract immediately. The fascinating part of that story was that her home isn’t even on the market. I kid you not.
Nationwide, housing inventory has fallen on a year-over-year basis for 37 consecutive months. As a result, approximately one-quarter of all homes sold last year were for higher amounts than their listed price. I had a Realtor in my office this week who told me that a recent home he was selling in Paramus had several aggressive offers from an Open House he did last Sunday. At least three of those offers were “above asking price.” When he told the potential buyers to present their “best and final offers,” he had the highest bidder actually outbid herself, and ended up offering over 15% “above ask” to secure the deal.
Attempting to purchase a house in this type of market can make the already complex process of buying a home even more overwhelming. Being thoroughly prepared in advance can help buyers successfully get through the buying process in a tight inventory market with limited stress and frustration. It can also be the difference between getting a house or losing it to someone else. Advance planning and guidance from a knowledgeable professional, will also help prevent a homebuyer who is uncertain about a home, not fall prey to pressure tactics and aggressive real estate agents or sellers who might be demanding immediate action. I have prepared a complimentary 10-step guide for my clients for best practice tips to navigate a competitive real estate marketplace. Feel free to email me directly for a copy.
In many articles published and often reiterated by the National Association of Realtors, it suggests that one of the first things that a prospective homebuyer should do in a competitive housing market is to determine and understand their true finances. “Before beginning the house hunting process, prospective homebuyers should receive a preapproval from one or more trusted lenders to verify the amount of money they are qualified to borrow.” They should also discuss and understand all of the additional costs of ownership such as taxes, utilities and insurance – and determine a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices, so buyers must be prepared to walk away if the asking price surpasses their budget. Not every house is “the one” and sometimes pressure tactics, even if unintentional, can cause severe regret later on. Shout out to the Nayowitz family and Happy Birthday Elana.
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].
By Shmuel Shayowitz
