What king of offer do you need to make in today's competitive market?
Gone are the days when buyers could shop for a home with the expectation they would be able to negotiate a lower sales price. Typically, buyers tried to determine how much less than the asking price they could offer and still get the home. From there, the buyer and seller typically negotiated and agreed on a revised price somewhere in the middle.
Things Are Different Today
Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:
• Receiving an average of 3.8 offers
• Selling in just 17 days
Homes selling quickly and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale.
Low supply and high demand mean homes often sell for more than the asking price. In some cases, they sell for a lot more. Selma Hepp, Deputy Chief Economist at CoreLogic, explains how these stats can impact buyers:
“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months. Now, almost 6 in 10 homes listed are selling over the asking price.”
You May Need To Rethink How You Look at a Home’s Asking Price
What does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. In today’s market, the highest bidder often wins the home, much like at an auction.
Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as you work with your agent to craft an offer.
Understand An Appraisal Gap Can Happen
Because of today’s home price appreciation and the auction-like atmosphere in the selling process, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent.
According to data from CoreLogic:
“Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”
When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget, know what you can afford, and work with a trusted advisor who can offer expert advice along the way.
Bidding wars and today’s auction-like atmosphere mean buyers need to rethink how they look at the asking price of a home. Let’s connect so you have a trusted real estate professional who can advise you on the current market and help determine what the market value is on your dream home.
At VIP Realty, we can help you find a home with the perfect home office. We have helped thousands of people achieve their dream of owning a home. Greg Skinner and Evan are the undisputed leaders in 43123 sales area. They take pride in the relationships they build while working relentlessly on their client's behalves selling commercial, industrial and high-quality residential properties. Give them a call at 614-537-1994.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. VIP Realty does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. VIP Realty will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.