Tips for Buyers in a Low-Inventory Market
Nearly three years of month-after-month declines in the number of residential properties on the market, plus a strong economy and low interest rates, has many buyers competing for desirable homes.
It’s a tough market for many house hunters, for sure, but tough is not the same as impossible. If you go into your home search with realistic expectations, willingness to use some creativity, and knowledgeable professionals by your side, you can achieve your dream of home ownership, agents say.
The first rule is to find a Realtor who knows the neighborhoods and the markets, said Denise Ramey, a Long & Foster agent based in Charlottesville, Virginia. You want someone who can quickly assess whether a home is priced right, and who has the background and skills to help craft an offer that will stand out among the many that sellers might receive.
It’s not uncommon today for a listing agent to let it be known that no offers will be reviewed until a certain date. Ramey said this sets the expectation that there will be multiple offers, and signals to buyers’ agents that concessions or price reductions are unlikely.
Sellers have the luxury of being selective when presented with multiple offers, so buyers have to go in prepared and without complications that might cause a delay. Ramey said that means:
1. Be ready to move. Sellers aren’t pressed to accept a contract with contingencies in today’s market. “If your current home isn’t under contract or at least on the market, don’t bother submitting an offer,” Ramey said. Agents need to talk with their buyers with homes to sell about where they will live if they’ve not yet secured a new place. Do they have family they can stay with? Can they find a short-term rental?
2. Get pre-approved for a mortgage. And if you are using gift money from a relative, have that in-hand too. Your offer will stand out if you’re ready to go to closing as soon as possible but willing to rent back to the seller if they need a few extra days.
3. Be flexible, and have some vision. Your dream home could be hiding under worn carpet and dated paint. You might even need to knock out a wall or two.
Ida Dennis, a Long & Foster agent based in Ashburn, Virginia, said she sets expectations early. Clients need to know this isn’t the market to make a low offer or ask for concessions, such as closing cost assistance, if it isn’t absolutely necessary.
Dennis said in some cases, she tries to find homes that aren’t on the market yet, to try to reduce the chance of a competing situation. That can mean going into neighborhoods where the buyer wants to live or sending letters, asking owners if they’re thinking of selling.
She also explains to buyers they need to put forward their strongest offer at the beginning.
“No playing games or having a ‘let’s see’ attitude, if you really want the house,” Dennis said. “When the home feels right, you have to act quickly. Many people lose out on homes because they want to think about it more.”
Buyers might need to stretch their budgets, too, said Mike Anastasia, a Long & Foster agent based in McLean, Virginia. They need to have a top figure in mind and stay within that range, while being prepared to offer more than asking price on the home they want.
And agents need to present clients with a clear picture of the marketplace, he said, adding, “The best thing we can do is let them know the neighborhood market trends and what the data is telling us. If you’re going to play, expect to pay.” Tools like Long & Foster’s market reports are a great way to find out what’s happening in a neighborhood’s housing market.
So your financing is in order, you’ve found an agent you trust and you’ve started packing up. Anything else you can do? Ramey said an emotional appeal to the seller sometimes can help.
“We actually won in a competitive situation; a townhouse we knew would be getting multiple offers. My clients wrote a sweet letter saying they were recently married, and this was where they wanted to start a family,” Ramey said. “I don’t know if it mattered in the end, but it made the offer stand out.”
Tiffany Frederick is a licensed Virginia Real Estate Agent of Long and Foster Reston, VA Email: Tiffany@LNF.com · Cell: (440) 785-6880 2100 Reston Pkwy Suite 102 · Reston, VA 20191
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