It's A Seller's Market
Many industries have been affected by COVID-19, but not all of them have been negatively affected. The housing market, rather than suffer during the pandemic, has exploded with activity. Favorable interest rates, coupled with the need to have a home in which one can not only live but work and play too, has driven hordes of people to look for homes. While the demand has gone up the amount of homes for sale has not. In fact, there is a shortage of homes, tipping the current market heavily in favor of sellers. But despite the competition there are somethings buyers can do to make their offers stand out amongst the rest.
Last week one of my clients put in a full price offer on a million dollar home. After the listing agent received the offer, she conveyed that her seller already had two offers, both were for $1.1 million dollars, and one of them was cash. The house had been on the market for just one day!
The Washingtonian reported just last week on April 1, that a house in Silver Spring, Maryland listed for $275,000 sold for $460,000 or 70% above listing price (Kashino, 2021). It received 88 offers, 76 of them were cash. While the house was underpriced as a selling strategy it provides us with a caricature of the housing market today.
Sellers are getting offers galore and buyers are hard pressed to bring their highest and best offers in order to get the house they want under contract. The problem for some buyers though is that the depth of their pockets is not the same as the depths of other buyers’ pockets, giving their competition a greater chance at landing the contract.
While this can make the process of home buying extremely frustrating, all is not lost! Below I have listed 5 tips to help home buyers get under contract and realize their dream of owning a home.
Tip #1 Offer Full Price +
Offer more than full price to make your offer stand out. If you are buying cash or have a large deposit you can leverage it the house doesn’t appraise. Make the Seller aware of your flexibility to pay more if necessary. If you are buying cash you can exclude an appraisal contingency altogether, which makes your offer even more attractive.
The point here is to flex your financial muscle as much as possible and to what is realistically doable for you given your financial circumstances. Don’t offer more than you can actually pay because if you have to pony up the money and don’t actually have it, then the deal will definitely die and you won’t have a home to move into. Even worse you may end up with an upset seller that could potentially sue for your deposit.
Tip #2 Highest and Best Terms
Highest and best means, in real estate terms, let it all hang out! If you were peacock it would mean rattle that train of feathers and make the Sellers see you mean business.
Highest and best terms could be, but are not limited to :
- Offering full price +
- Short inspection period
- Waiving an inspection altogether ( I do not recommend this, but I have seen people do this).
- Agreeing to a quick or long closing depending on the Seller’s needs.
- Offering to pay Seller’s closing costs.
What terms have you offered?
Have you offered something that would help others? Let us know what it was in the comments section of this article.
Tip #3 Pay Cash
A house is an appreciating asset and a great way to earn money on a forced savings. So if you can cash out retirement funds or other investments like stocks, think of it as just changing what you are investing in. And you can actually live in this investment!
Tip #4 Adjust Expectations
If you are a buyer right now, chances are you would prefer a house that is already renovated, but that puts you in the running with a lot of other buyers. So adjust your expectations and maybe look at houses that have been on the market a while longer. You may find more motivated sellers AND you may find the opportunity to remodel the house into the house of your dreams. So be pragmatic in your expectations.
Another expectation that you might adjust is the size of the house or the number of rooms and bathrooms. For example you might find a 3 bedroom one bathroom that would just be perfect if it had another bathroom. Well you can always add that on! So don’t discard those possibilities.
If you don’t have money to renovate ask your mortgage broker about a renovation loan.
Tip #5 Relocation
In South Florida where I live, the market has gone completely bananas. You quite literally cannot get an offer in edgewise before a home is taken off the market. This is happening because in addition to locals looking to buy homes there are a ton of new residents from out of the state and out of the country looking for a place in South Florida to call home. This has simultaneously lowered the supply and raised the prices in significantly in some areas. As a result in Miami-Dade and Broward County property values have escalated at a very rapid pace, pricing some buyers out completely.
However, there are still very affordable opportunities in Palm Beach, Martin, St. Lucie, Collier, and Lee counties for buyers that want to stay in the South Florida area. In fact, the further north or west a buyer goes in the state, the lower the prices are. In the Ocala area, for example, there are new and modern homes for sale for just over $200,000. In Miami-Dade and Broward there are condos for that amount but very few if any single family homes. But if a buyer can relocate they can get a lot more bang for their buck.
Tip #6 Buy New Construction
There market of already built homes is in low supply throughout Miami-Dade and Broward Counties but there are new construction opportunities all over South Florida of which buyers can take advantage. In Broward County, specifically in Oakland Park, Pulte homes is developing 405 new homes on an old golf course. Pulte is also building another 85 new homes at Cassia Estates in Lauderdale Lakes. D.R. Horton is developing Gardenia Park in Fort Lauderdale’s Progresso neighborhood.
Lennar, Ryan Homes, K. Hovanian and other developers are building various new communities in Parkland. Minto builders, who built the 36 villages of the Township of Coconut Creek bought over 4,000 acres of land in Palm Beach County and founded the City of Westlake. Minto is developing Westlake from the ground up. Similar new development is happening on the west coast of Florida and throughout the state. So there are lots of opportunities in new construction, but finding them is a whole other ball game!
Where to find new construction homes in Florida.
Finding a new construction home can be, quite literally, a guessing game, since new construction homes are not yet listed in the MLS. Buyers have to dig deep to discover these opportunities, unless they use a site like, IWantToBuyNewConstruction.com.
This website allows potential buyers to research new construction opportunities that are available in Florida. It gives them a centralized platform on which to find new construction homes and compare the various available options.
In every challenge there is opportunity!
This quote is often attributed to Winston Churchill, the Prime Minister of Great Britain during WWII. It is one of my favorite mantras, because I firmly believe that in every challenge there is opportunity, no matter what the challenge.
So if the challenge for you right now is finding a home in a Seller’s market be flexible and pragmatic and try the tips suggested in this article. They are tried and true and as a result, every single one of my buyers is currently under contract.
Don’t forget that if you have any tips, to share them with us below!