If you’re looking to buy a home, one of the key deciding factors in setting your budget or determining your overall buying power, is your mortgage interest rate. In recent months, the Federal
What's a Seller's Market?
Dated: February 10 2022
If you follow real estate (which I know you do) or have simply watched the news over the past several months, you’ve likely heard that we are in a seller’s market. One question I get asked often as a real estate professional is, “What is a seller’s market?”
In real estate, we typically refer to the ebb and flow of the housing market as a buyer’s market or seller’s market. It’s important to understand changes in the housing market to ensure you’re maximizing your selling potential (profits from existing real estate) and aware of your buying power and positioning to ensure your offer is accepted.
Over the past several months interest rates have fallen to an all-time low. When interest rates fall, buyers that were otherwise unable to enter the market are now major players in the real estate arena. Similarly, current homeowners also have the opportunity to upsize or downsize while still benefitting from historically low interest rates.
When an influx of buyers enter the market, the demand for real estate goes up. When demand is high and inventory is low, a seller’s market occurs. In a seller’s market, buyers are faced with fierce competition to secure their dream home. Sellers will experience multiple offers, limited days on market, and offers that are well above listing price. YAY for you sellers out there! If you’re a homeowner thinking about making a move, there’s no better time than now to ensure you’re getting the best return on your investment.
A seller’s market is great if you’re a current homeowner, but how does a seller’s market affect the buyer? If you’re a buyer, especially a first-time homebuyer, navigating a seller’s market is difficult. You’ll be the ultimate competitor with navigating multiple offers and limited negotiation power. Because homes are selling for above list price, you may face issues with appraisals, which could impact your financing. Some buyers have chosen to forego contractual safeguards such as home inspections and other contingences to ensure they are submitting a competitive offer. Sellers are looking for the best offer which is generally based on the highest purchase price with the least amount of contingencies to get to closing.
If you’re a buyer in today’s market, here are a few pointers to ensure your offer will make it to the finish line:
· Save, save, save – Cash is King! The more money you can put down on your purchase, the less you are financing and may be able to avoid concerns with appraisals and financing issues.
· Speak to your lender about your loan options – if possible, get preapproved for a conventional loan and have your preapproval letter available to submit with your offer.
· Leverage first-time homebuyer programs – both ND and MN offer down payment assistance programs for qualified buyers.
· Avoid asking for closing costs – if possible, refrain from asking the seller for assistance with closing costs to sweeten your offer.
· Be patient and persistent – don’t be discouraged if you submit offers and they are not accepted. It’s not you, it’s the nature of the market. Stay positive and know that your dream home is waiting for you!
· Consider new construction – new construction is a great way to avoid bidding wars; however, due to supply chain issues, you may experience a longer than usual construction timeline. Lock in prices now to avoid price increases.
· Align your trusted advisors – homes are moving quickly, which means you need to move quickly as well. Speak with your real estate agent, lender, insurance agent, and other trusted advisors to ensure they are on standby and ready to assist you.
· Now is the time to buy – interest rates have started to climb and are expected to rise throughout 2022. When interest rates increase, your buying power will decrease.
If you’re looking to make a move, let’s discuss your goals and explore your options. Whether you’re planning to buy, sell, or both; I provide a no-obligation consultation to determine where you fit in the market today and how we can achieve your real estate goals for tomorrow. I look forward to discussing how I can best serve you and your real estate needs! Let’s connect and GET MOVING!
Meet Nick, a seasoned entrepreneur with a heart rooted in the rustic charm of a Minnesota dairy farm. Those rolling fields of his upbringing didn't just cultivate crops; they sowed the seeds of his pa....