“It’s a very tight market and it’s definitely a seller’s market, much stronger than we’ve seen in the past and it’s lasting longer,” Geier said. “It doesn’t look like it’s going to change too soon.”
Home builders attempting to build new homes are running into difficulties now because of the labor market, she said.
“They’re having difficulty getting people to work and then there’s also the expense of labor and other supplies that has gone up dramatically,” Geier said. “It just seems like you figure out one problem and then there’s something else (that) pops up.”
Buyers who scramble to put in a bid on homes that pop up on the market only to find themselves up against numerous others can take measures to ensure they have a better shot competing and securing a winning bid.
Geier said she suggests buyers first meet with a lender and get pre-approval for a loan so the seller knows you’re a qualified buyer and the buyer knows they are searching in the proper price range.
Buyers who make an offer need to be ready for a bidding match, she said.
“In a multiple-offer scenario, you’re likely to be competing above list price, which is what we’re seeing a lot of,” Geier said. “Don’t expect to have a counter or to counter yourself because sellers can pick and choose from those multiple offerings, so they’re not likely to have that conversation that used to be typical in a transaction.”
Buyers can reduce or eliminate their contingencies, waiving financing contingencies or limiting the inspection period.
“I know some would say ‘Well, just don’t have the inspection,’” Geier said. “I really don’t recommend that. I think you do need that but you do have an opportunity for some flexibility that once you have an inspection report, that you can work with the seller on.”
Buyers also should be flexible with the dates or deadlines they are setting, so if a seller needs more time after the closing before they can move in, a buyer can be prepared to offer that.
Buyers need to be ready in case there is a difference between a negotiated price and a lower appraisal. “Maybe you’ll be able to fill that gap,” she said. “You need to look to see what you have on hand. Be prepared. Do you have access to cash that you could use?”
Another trend the real estate market is seeing more frequently is buyers using an escalation clause, putting into place a system that any time an offer comes up that exceeds one’s own, an automatic bid to top that by an agreed upon amount goes into effect, but only up until a certain ceiling, Geier said. That’s another situation where buyers need to identify their access to cash for that purpose.
Those looking to purchase a home also need to stop and consider why they’re looking to buy, she said. Is it the interest rates and the fear of missing out? Is it job-related, making a move absolutely necessary?
Examining a baseline, what criteria are most important, also is a helpful strategy when searching for and securing purchase of a home, she said.
“Is it location, is it the style of the home, like one-story versus two-story?” Geier said. “Is there a ceiling on what you can comfortably afford, which is kind of where you start. Write it down. These are the absolutes that I have to have, but beyond that I could possibly compromise, like how many bedrooms or what the layout of the home is or how big the yard is, just different things like that that might be more easily compromisable for you.
“You have to be a little creative in how you look at things. Try to give yourself a little wiggle room, so to speak, on what would be acceptable to you.”
Last, but not least, Geier suggests buyers retain their optimism and persistence.