What about Buyers?

WHAT ABOUT THE BUYERS?

Continuing on from the front article on options in real estate…what about options for the buyer?? With the advent of technology spinning off in so many directions combined with this frenzied seller’s market – what does that mean for the buyers out there? What options do buyers have to compete in this market?

Well let’s talk about the market first. There’s no doubt this is a seller’s market and that means quite honestly more challenges for the buyer. Due to historic lows in inventory, there are simply less homes to look at. The inventory is so low in fact we’re getting started sooner. If your goal is to buy something in June for example.. starting to get out and look at homes as early as March is suggested. You may need some flexibility in your living situation from buying to selling. We like to call that ‘Having a Plan B’.

Short-term housing solutions can off-set some of the buying challenges. You don’t’ want to make a purchase under pressure. That means you’ll be calling us to sell sooner than you planned to. Although not bad for us – not what we want to see you go through! Doing it right the first time around takes patience. Having a back up plan on housing allows for patience for your purchase. Short term rentals, AirBnB, VRBO, Extended Stay, friends or family – any type of contingency plan is a great plan.

What about terms within an offer to stand out? We’re seeing a ton of creativity in offers to make them standout yet limit a buyer’s exposure to risk. Increased earnest money, letting a seller choose the closing date, financing commitments and appraisal guarantees are just a few terms we work on. Escalation clauses have also gained traction this past year. An escalation clause for example is offering $400,000 with a clause to beat any other offer by $2,000 up to a max of $420,000.

On the bright side – rates are crazy low. We’re still seeing 30-year fixed rates below 3% which really allows a buyer to take advantage of cheap money and make the purchase they want. If you think about it terms of cost – going over a list price or not – the cost of a home in terms of monthly payment has been held in check due to low rates.

Let’s look at the price of a home in terms of down payment and monthly payment – 2 of the largest factors a buyer considers. If you’re planning on putting 10% down, an extra$20,000 in purchase price costs $2,000 out of pocket. If you’re conservative on calculating rates - $100,000 at 3% = $420 per month. So paying $20,000 more for a home than you expected costs $2,000 out of pocket and $85 per month more. Is that home worth that to you? As many of you know that have worked with us – we often guide our buyers through just that. What’s the home worth to you? – more importantly, what is it not worth to you!

So is there anything actually making this market easier for buyers too? Yes! A few things come to mind quickly on that – technology & teams and new construction. Technology has gone from allowing the realtor to hold the data to the data being completely public and available at your fingertips. If you’re ready, confident and prepared – acting quickly makes a huge difference. Working with a team that can get out when a listing hits day 1 is huge. There are plenty of stories about buyers putting in 5, 6, 7+ offers and finally getting one approved. This does happen but ask our friends Molly & Trevor about their recent buying experience. Plenty of prep time through their MLS search & really knowing what they wanted was the key for them. We made a very solid offer with a home that was day 1 on the market. It was the first offer we put together with them and it was crafted well. With 7 offers looming in the background, they chose to work with us. The offer was solid, to the point and gave the seller the ability to turn off the chaos. Keep that in mind on the buyer side by the way – having 30 showings in a week is an absolute nightmare for a seller and they want to be done!

New construction has also been prevalent with the listing shortage. This is pretty common sense and has inventory has shrunk, builders have come out of all corners of the Twin Cities. New construction is less competitive than existing construction and allows you time to prep as well. If it’s a spec home or starting from scratch – the timeline can create some comfort for a buyer especially those that needs to sell as well.

Whether a buyer or seller – we customize the approach by taking the tools we have to fit your experience.