The Minneapolis Area Association of Realtors released their statics for February 2017 last week. The same dynamics that have plagued the industry for several years remain: low listing inventory & high buyer demand. Once again, compared to the previous years we are seeing an increase in pending sales & a decrease in new listings. With mortgage interest rates on the rise, which happened again last week, I anticipate more buyer demand in the coming months. This supply/demand imbalance will further exacerbate the already low listing inventory levels. Instead of rehashing the topic of how low inventory levels have an effect on the market again, in this addition I will provide some advice to those hoping to buy in this ultra-competitive market.
For buyers, low listing inventory presents numerous challenges. If you are serious about purchasing a home in the current market you need to be educated on market dynamics, act decisively & make a strong offer. Chances are you will be in competition when you make an offer.
It is important to become educated on the current market conditions (if you read this blog regularly you have a head start😊). However, reading blogs & shopping for homes on your favorite real estate website won’t accomplish this. In my opinion there is no replacement for stepping foot into a home. I recommend engaging with a Realtor & spending a few days looking at a variety of homes that fit your criteria with the goal of education, not purchasing. Beyond helping you understand the current market, this will also help you determine what condition you require in a home purchase. Are you a buyer that needs an updated home in “turn key” condition, or are you willing to take on a “fixer upper”? Knowing what home condition you require can save you time by being more focused on your search.
In addition to becoming educated on the market, you need to be prepared to act decisively. Because you might be in competition, you need to be ready to make an offer quickly. To accomplish this, you need to have everything prepared & in place. This preparation includes getting approved for a loan, engaging the help of a Realtor & developing a strategy with your Realtor.
Making a strong offer not only includes offering the right dollar amount, but also making your offer as “clean” as possible. Eliminating reasons that a seller would reject your offer will position your offer for acceptance. For most sellers, the paramount aspect of an offer is the price. However, there are other factors that can influence how your offer is viewed by a seller. These factors include: closing date, earnest money amount, down payment amount, type of financing (conventional, FHA, etc.) & length of inspection period. All this factor into a seller’s decision making process. If you are determined to have your offer accepted, you want to give the seller few reasons to reject your offer. Having a skilled Realtor on your side will benefit you greatly in making a clean & strong offer.
In summary, the market can be challenging for buyers these days. If you are determined & committed to buying a home you need to be educated on the market, be decisive when you find the right home & make a strong offer. If you follow this formula I can’t guarantee your offer will be accepted, but you should be ready & well positioned to compete when the time comes.