Low inventory home buyer strategies

I’ve written about the low housing inventory phenomenon many times over the course of a decade. I’ve also written about low inventory home buyer strategies in the past. Yes, this has been an issue for that long, although it has ebbed and surged. One consequence has been that many potential homebuyers have stayed away from the market, waiting for conditions to improve.

Low inventory home buyer strategies

Low inventory home buyer strategies

Housing market conditions have left many homebuyers frustrated over the last few years. The outlook isn’t that much better this year. Housing inventory shortages will likely continue to hold buyer activity in check.

Although it is expected that many more homes will be sold this year compared to last, the pent up buyer demand will impact the average number of homes on the market at any given time. In plain language, on the current trajectory homes will continue to sell quickly and at appreciating prices.

Are you one of those still waiting for the housing market conditions to tip in favor homebuyers? Or are you just entering the market? Regardless, low inventory home buyer strategies, such as being prepared and proactive, will help you on your home buying journey.

If you’re paying cash for the home, make sure you have access to your funds (or prepared to get access) prior to entering into a contract. Having assets doesn’t necessarily mean it’s liquid or easily accessed. Ask for the process to get your funds from the institution holding your assets.

If you’re getting a mortgage, get preapproved. Having a preapproval will not only help you create a buying budget, it will give you a head start on the buying process. The preapproval letter attached to your offer tells the home seller the bank will give you loan based on the information they reviewed.

If you’re planning on working with a real estate agent, choose your agent before you start visiting open houses. Not knowing if and with whom you’re working can create an unnecessary delay on making an offer. Delays can put you out of the running if there is a tight deadline for offers.

That said, be prepared to make an offer quickly. Communicate to your agent your offer in price and terms. Most likely, the agent can quickly send the offer to the listing agent by having you electronically sign it.

It’s likely that your first (or subsequent) offer won’t be accepted, especially in a multiple offer situation. Always have a plan B, C, and D, which may include looking for off-market homes for sale, and the possibility of renting.

By Dan Krell
Copyright © 2024

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

What’s your home buying strategy?

If you’re thinking about buying a home, you may be unaware of what awaits. Your expectation may not be exactly of what is really happening in today’s housing market.  I understand that your beliefs and expectations are probably based on what you have read or heard.  But the current housing statistics at face value don’t tell the story.  It’s actually the cause of these stats that are telling and the force behind what is actually happening. Once you understand this, you can decide on your best home buying strategy.

home buying strategies

First, let’s look at July’s housing statistics just published by the Maryland Association of Realtors (mdrealtor.org).  Existing home sales decreased 22.6 percent from the same time last year.  Homes that went under contract (Pending Home Sales) decreased about 8.3 percent from the same time last year. These home sale stats sound like what was being reported in the fall of 2007 (and you know what followed), especially since the forwarding looking stat Pending Home Sales decreased about 8.3 percent compared to the same time last year.  At face value, you might conclude that such a huge reduction in home sales means that home buyers soured on the market (possibly because of the increase in mortgage rates you’re hearing about).

But home sale prices are increasing! The average home sale price increased about 3.2 percent compared to the same time last year, which is about $486,385.  

So, what is happening?

New listings decreased about 34.5 percent compared to the same time last year! Active home sale inventory decreased about 35.7 percent compared to the same time last year! Basically, its supply and demand. When there is a shortage of a product when there is a demand, buyers bid up the price.  The fierce home buyer competition is the reason why the median days on market for a home is only 7 days.

If you’re thinking that you can easily find your dream home and get a good deal, stop and do your due diligence. Know that you will be up against aggressive home buyers who are likely willing to bid up the price as well as waiving various contingencies to make their offer stand out.

What’s your home buying strategy strategy?

Before you go out and make an offer on home, take stock in what you bring to the table. Have you been pre-qualified for a mortgage?  If you’re paying cash, is it liquid? Needing extended time to liquidate or bring funds from overseas is usually a non-starter for a home seller. Think about getting a pre-inspection so you know what you’re getting yourself into. Find a seasoned savvy real estate agent to help you navigate the market.

By Dan Krell
Copyright © 2023

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Whose Responsibility is it anyway?

When selling a home, the seller is obligated to provide a set of disclosures to the home buyer. The disclosures cover almost everything from home condition to local zoning compliance. Even common ownership community (condo/HOA) disclosures are incorporated into the home sale contract. However, buyers always have questions. Some questions are easily answered because they are about the physical property.  However, some questions require a call to the county/city or the condo/HOA association for an answer. When the buyer or their agent poses a question that requires a call to the locality or condo/HOA association, whose responsibility is it to gather and provide those answers?

whose Responsibility is it
Homebuying goals

This is not a new issue, and buyer agents usually make the call themselves. But I recently received from a buyer agent asking about a condo listing I had. The agent asked specific questions about the possibility of the property being used as a rental. She asked also asked about general condo rules for rentals in the community. I told the buyer agent to call the condo association and ask them directly. Taken aback expecting an answer from me, she apologized saying she thought I was the listing agent. I confirmed that I was the listing agent and directed her to seek the answers directly from the condo association, because they would be from the source.

Some agents would have given her some information, whether it was accurate or not. To be honest, I did not know the answer, therefore I couldn’t provide her with the info. Even if I did know something about it, I still would have directed her to the condo association for the complete accurate answer.

Whose responsibility is it anyway?

Home buyers rely on the information when making buying decisions, and how much to offer. So, it goes without saying that home buyers want accurate information. That’s why most agree that it’s best practice to direct the buyer/agent to get answers from the source. This way they can make the best decision based on correct answers.

Whose Responsibility is it to verify information? Regardless of what information is provided (or not provided) on the sell disclosures, the home buyer should verify doing due diligence. The home buyer should confirm the accuracy of what is disclosed, as well as investigate any areas of concern.  Although it’s easy to verify some information because of its public information availability, some information can only be obtained via a phone call or email to the locality where the house is located. 

By Dan Krell
Copyright © 2023

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Real estate agents have a role

real estate agents have a role
hire a professional

Last year, at the height of the latest sellers’ market, I talked to a friend about selling his property. He gleefully quipped “Haven’t you heard? Nobody uses a real estate agent anymore [to sell a home].” To be honest, I hear that every seller’s market…and it’s a false statement.  In fact, most home sellers hire a real estate agent to sell or buy a home. So, in response I asserted that Real estate agents have a role in the real estate transaction.

The National Association of Realtors’ 2021 Profile of Homebuyers and Sellers indicated that 90 percent of home sellers hired a real estate agent.  The reasons for hiring an agent to list your home apply in any market, and include assisting you to set the list price, to prepare the home, and to facilitate the sale process.

Setting the right sale price is important in any market. During a sellers’ market, it may be tempting to set a high sale price. But the fact is that you can still turn off home buyers with an unrealistic price.  A real-life example comes from a listing appointment I had last year.  The seller was disappointed in the price range I suggested for her home (her home was smaller than other homes in the neighborhood). She was clearly dissatisfied with what I shared and said, “In this market, all homes sell for more than the last one that sold.” This is also a false statement. In a market where homes sold on average 7 days, she wasted 30 days on the market only to sell for a price that was in the range I suggested based on comps and adjustments.

Home preparation is also a key factor in any market. Home preparation entails decluttering, staging and sometimes repairs.  Let’s face it, the better the home presents, the quicker it sells. In a seller’s market, a well-prepared home can elicit a bidding war, raising the sale price above list price. 

Hiring a real estate agent is not for everyone.  But the stats revealed by NAR’s 2021 Profile of Homebuyers and Sellers indicate that real estate agents have a role in the real estate transaction. Real estate agents are housing-market experts, recognizing and anticipating trends.  Agents can provide detailed market analyses to assist in formulating a home’s listing or sale price.

Furthermore, from the time your home is listed to the day of settlement, agents are facilitating the transaction. Starting with marketing your home, the agent will work to procure offers on your home and assist in negotiation. They will also assist in helping completing the sales contract and follow up on contingencies. They will also work alongside other professionals to ensure any bumps in the journey to settlement are worked out.

By Dan Krell
Copyright © 2022

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Get a mortgage preapproval

Many years ago, the home buying process was very different than it is today.  For example, home buyers relied on their real estate agents to qualify them to figure out how much home they could afford, instead of getting a mortgage preapproval.  Making an offer on a house was done without a mortgage preapproval letter.  And the mortgage application was usually made after the contract was ratified.  The process may seem backwards by today’s standards, but that’s how it was done. 

real estate mortgage preapproval
Real estate is voted as best investment

The problem with the old process was that sometimes the loan was denied, causing heartache and anguish for the homebuyer and seller. Times have changed.  In today’s market, homebuyers are expected to be more organized, which helps streamline the homebuying process. The includes getting a mortgage preapproval letter.

You may have heard it called a prequalification or a preapproval, the purpose is the same.  The preapproval letter not only qualifies you, but also gives the home seller confidence that you can complete the sale.

To preapprove you, your lender checks your credit and reviews your financial documents.  This will give the lender an idea of what loan program is best for you, as well as calculating your debt-to-income ratio to determine your maximum loan amount.

Your preapproval gives you a head start on the home buying process.  When the lender reviews your credit and finances, they can see if there are any obstacles to getting your loan.  The lender can help structure your loan in advance, which will guide you in your preparations.  Additionally, the preapproval letter will show your agent and sellers that you’re a serious buyer because you’ve already started the mortgage process.

Don’t feel pressured to work with any lender, even if they are affiliated with your agent.  As a homebuyer, you have right to choose the lender you want.  Some buyers will go where they bank for a mortgage, because there is a mutual familiarity.  Some look for the best interest rate, and others look for personal service.  It can help to understand the lender better by comparing several by talking to a local loan officer.  The bottom line, however, is to make sure the lender is licensed and is knowledgeable of the jurisdiction where you are buying.

By Dan Krell
Copyright © 2022

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.