If you are “in the market” and looking to buy a home you may have noticed a trend…… you look at a home, decide to put in an offer, and your agent says the words ” multiple offers” or ” all offers will be reviewed Wednesday at 6pm”. It can be extremely frustrating.

Unfortunately I cant change the market, but I can shed some light on why we are in this market.

If you recall about 8 years ago the government rolled out a buyer incentive. This incentive was specifically geared towards prospective buyers in order to “stimulate” the market and help homes sell. Buyers were given the option to get an $8000 tax credit. This credit could be used towards a down payment or as an actual credit when they filed taxes.

The incentive worked! Buyers, who may have been 2+ years out from actually buying, now had the means to get into a home.  Things were looking up. Homes were selling, the buyers were spending money on things like Furniture, appliances, towels, sheets, plates…..

the GDP (Gross domestic product) was ticking up slightly and the economic forecast was looking good.

You may be asking “What does this have to do with me?” Stick with me, its about to get good.

Fast forward to 2016. Those first time buyers should be (and some are) preparing to move. Maybe they started a family and need more space, maybe they decided the condo life was more appealing.

Either way, the need to move is there. The issue is that those buyers who we “stole” (remember the buyers who would not have been ready for 2+ years) from the future are not financially ready to buy “up”.  Yes they want to , and yes, they may need to. The issue in many cases is that their income has not gone up enough to warrant that larger purchase. This is creating a situation where home owners are STAYING PUT!

The result today is a lack of available inventory for the current entry level buyers. The lack of inventory is causing multiple offers on many homes and even pushing prices up.

Buyers are in a frenzy. They are putting in offers site unseen, borrowing money for closing costs, waving inspections, bidding $5-$10,000 over asking, just to get an accepted offer.

While I don’t have a crystal ball, I do have some very strong data that says “this wont last forever”

In about 16 months – 2 years the market should level out and the inventory will increase.

But where does that leave the current buyers? It’s a tough market. My best advise is to stay level headed, leave ample time to find just the right home, DONT RUSH! Making rash decisions on a home (quite possibly the larges purchase you have ever made) can lead to buyers remorse.

Here are a few tips to help you make a solid offer.

1. Work with an agent! Have an agent that you trust and feel will help you put your best foot forward. Talk to family and friends about who they recommend and talk to a few agents to see who you feel will best support you through the process.
2. Get pre-approved with a LOCAL, reputable lender prior to starting your home search. Your agent can recommend a few. Keep in mind that just because you bank at XYZ bank does not mean they have the best programs or that it will be an easier process.
3. Be prepared to pay your own closing costs. In this market sellers are reluctant to cover the buyers closing costs even if you increase your offer to cover them.
4. Be open to looking at options that  you may not have thought about. Perhaps your looking for a condo but are feeling a little uneasy about that monthly bill. Maybe considering a 2 family home with the ability to collect rent from the 2nd unit could ease that monthly mortgage payment.
5. Have a home inspection but don’t nit pick on the small stuff. Home inspections are to give you the knowledge to properly maintain your future home and to point out major defects. Requesting a laundry list of trivial repairs could push the seller to move on to another offer.
6. Stay on top of your loan process. Yes, its painful but getting your lender the information they need in a timely manner will ensure a smooth transaction.
7. Have a back up plan. Often times closing dates get moved. This may mean that you are scrambling to figure out a place to stay for a few days. Planning ahead for this will make things much easier IF it happens.

Having all of the tools necessary to make educated decisions about your real estate transaction will allow for a smoother, less stressful process.

 

For more information about current market conditions please contact Kristi Whitten, kwhitten@kw.com     603.674.4985      http://www.kristiwhittensells.com