Clients, especially first-time buyers, often ask us if there's any way they can compete in this bonkers market. Yes, there is hope! Here are a few strategies that are helping our clients right now:
Buy a cosmetic fixer. Cosmetic fixers–properties with dingy carpets, outdated fixtures, chipped paint, quick fixes made with cheap materials, or generally been lived in harder than they've been loved are where there is still a clear opportunity for buyers in the current market. These properties are less competitive because today's buyers expect "move-in ready" properties. Between labor shortages, supply chain issues, and the desire to socially distance, remodeling is the last thing some folks want to do. But if you are looking for value, pursuing such properties could mean less competition and a better price. It's not for everyone, but it can be a winning strategy for those looking to "earn their way" into their first home.
Sellers should note that putting a property on the market without doing a refresh shrinks your buying pool. In addition, there is a general feeling out there that folks want to spend their time doing things they love and not working on a house, so that translates to less interest in cleaning up even a moderately neglected property.Look at homes that are slightly over your price range that are lingering on the market. As counterintuitive as this may sound, buyers are not psychologically prepared to make offers for less than full price, so if they see a property that seems overpriced, they will move on to the next one. If a home has been on the market for 2-3 weeks, this is a clear sign that something is wrong, and if it is just the price, well, that can be fixed! It does take a steely heart to do so, as it is not always successful, depending on how realistic the seller is, but it has won the day for a few of my buyers lately.
Make your offer "as good as cash." This method takes some risk tolerance and financial wherewithal. But, if you have the desire and ability, doing things like waiving the appraisal (or even the entire loan contingency) can help you compete with a cash offer. If you are confident you will get your mortgage and can cover the price even if the appraisal comes in under your offer price and are willing to take on some risk, including losing your earnest money (1-3% of your offer price), this plan can work. This is not our favorite option, but our job is to present the options so you can make an informed decision.
With all of these methods, there are pluses and minuses more than right or wrong answers. Our goal is to familiarize you with the tools that have helped our clients succeed in today's market.
Please reach out if you'd like to talk through your options. We are here to help>>