You can still find your dream home in this market! The key today is PATIENCE……In today’s real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower sales price. In a typical housing market, buyers try to determine how much less than the asking price they can offer and still get the home. From there, the buyer and seller typically negotiate and agree on a revised price somewhere in the middle.
Things Are Different Today
Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:
- Receiving an average of 3.8 offers
- Selling in just 17 days
This is what happens when you have an inventory shortage! As housing demand increases because there’s less to choose from, so do the prices! In our market around Lafayette, LA, we had almost 3,000 houses for sale in Acadiana at the end of 2019. Which was considered a buyers market. As of today, we have only 1,078!!! Imagine if 2 of the largest builders in the Lafayette, LA area (DSLD & DR Horton) worked 24 hours a day, 7 days a week to build 1,000 houses. We’d still be at a shortage of 922 homes! No telling how long it’ll be until we get back to the days where a home buyer can sit and think a bit about the home they are considering!
You May Need To Rethink How You Look at a Home’s Asking Price
What does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. In today’s market, the highest bidder often wins the home, much like at an auction.
Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as you work with your agent to craft an offer. Even the type of loan you’re getting can affect your chances when a seller is reviewing multiple offers!
Understand An Appraisal Gap Can Happen
Because of today’s home price appreciation and the auction-like atmosphere in the selling process, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent.
According to data from CoreLogic:
“Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”
When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget, know what you can afford, and work with a trusted advisor who can offer expert advice along the way.
I recently had a listing where we were already under contract and received a backup offer that was $25,000 OVER the asking price!!! This home was nothing snazzy, it didn’t have a pool or tons of acreage! It was a normal 4 bed, 2 bath home in Broussard, LA! Back in 2018-19 buyers had tons of homes to choose from that resembled this exact home. It’s just not the same today!
Bidding wars and today’s auction-like atmosphere mean buyers need to rethink how they look at the asking price of a home. Now more than ever you need a trusted real estate professional who is experiencing these market conditions on a daily basis! With the low inventory we’re experiencing Realtors get tons of info on off-market properties long before the general public knows about it! Feel free to reach out to get an edge on what’s coming up! I hope you enjoyed this quick article and as always feel free to call/text 337-654-0569 for help with all your Realestate needs!
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