Fall-ing inventory could mean bidding wars continue this Autumn

 

The spring ‘pause’ in real estate activity has led to one of the busiest summers for residential real estate sales and the heightened activity appears to be spilling over into the fall months. 

Typically, in the Portland Metro area, the September through mid-November months tend to be the second busiest time for selling homes. With the pent-up demand for homes from buyers and continued low interest rates, this fall season could prove to be more active than usual.

Many buyers have found the increased flexibility in working from home allows them to move further from the city or work facility and are looking to move to the suburbs or find acreage property for more space and potentially lower housing costs.

We’re also seeing a bit of competition between the generations. Many boomers who are retiring are looking to downsize into single level/ranch homes. These homes are also being sought out by millennials who see this style and size of home as the perfect starter home.

Low interest rates, generally hovering at 3% or lower as we enter the month of September, are providing buyers with an increased ability to bid above a listing price or buy more home with just a modest increase in their monthly payment. The low interest rates are creating affordability most buyers didn’t have before.

However, sellers are content to stay put. It’s all contributing to competition for limited inventory.

So, how can buyers win in a seller’s market?

It starts with a competitive offer – which isn’t always a higher price.

If a home you viewed seems to be underpriced relative to other homes you have seen, bidding higher than what it is listed for may make sense. Sometimes, however, over-bidding on a property may not help in the long run. Should unfortunate events occur requiring you to move sooner than you anticipated, you may not be able to recoup those costs in a sale, and you may end up losing in the end.

Here are seven strategies to enhance your offer in lieu of, or in addition to, a higher sale price:

1. Shorten the inspection period from the typical 10 business days to 5 or 7. Ensure your inspector is available before writing that into the offer, because in hot markets inspectors are often scheduled out for a week or two. For the seller, this means their home is off the market for a shorter period of time if you choose not to move forward with the sale following the inspections.

2. Consider a ‘pre-inspection’ before writing an offer. We often don’t have this opportunity in the Portland area with homes coming on the market and offer deadlines set in 2-3 days. If the offer deadline is set for several days out, and the sellers agree to the inspection, you could then waive the inspection in the offer without taking the risk of having no inspection at all. This strategy may show sellers your level of commitment to the process. Keep in mind there is a risk of spending money on the inspection upfront and then not having your offer accepted.

3. Ask the seller what is important to them when considering offers, besides the price. They may need additional time of possession after the sale closes before they are able to move into their next home. They may benefit from a longer close date to allow them time to search for and obtain their next home. If you have flexibility in your schedule, work with the seller to ensure the time of closing and possession work well for both parties.

4. In a low inventory, hot market, it’s important for buyers to keep an open mind. A home might need a few upgrades to become the home of your dreams. Look at the house and understand what it has to offer. Not every house is going to be 100% of what you want. I generally suggest if a home offers 75%-80% of what you are looking for, you can typically make that house a home.

5. Offer for the seller to leave any personal items on the property that they no longer want or need, and you will address them upon possession. This offer term may need to be written on a bill of sale attached to the offer or written on an addendum indicating personal items remaining are of no value. Check with your lender to see what will work best with your financing.

6. If you are in a multiple offer situation and you submitted a purchase price higher than the list price, and if you have sufficient liquid funds available, consider offering to make up the difference between a low appraised value and the purchase price, up to a certain dollar amount. This will give the sellers a little ease of mind during the appraisal process.

If you are in the market to buy a home this fall, ensure you have an agent by your side that knows the business and the proper questions to ask. A good agent will research what offer terms will be attractive to sellers, will always be thinking of how to best represent you and help you to put your best offer forward, and will ensure you’re well-informed throughout the process.