Buying a Home When Inventory Is Low
We are seeing a large shortage of real estate inventory at both the state and national level. Why is this you may ask? It is a combination of a few things, let’s take a look back to 2008. When we hit the recession, people were reluctant to purchase a new home and take on a large debt due to the uncertainty of the economy. You also had less buyers entering the market because it used to be extremely difficult to get pre-approved for a mortgage. With fewer buyers, homebuilders cut back on building new homes so they would not have an abundant amount of vacant properties. This short period of holding off on building led to an inventory shortage that is still affecting us today, as companies are trying to continuously play catch up.
Now that the economy has bounced back there's a higher demand for housing, but the inventory available has yet to meet that rising demand. This is awesome news if you’re in the market to sell, but can be extremely infuriating if you’re looking to buy. Here are a few tips and tricks you can do to help find your dream home when the inventory is at an all time low.
When you go to look at a home it is easy to list of reasons on why this isn't your perfect match, as you can see everything wrong with it right in front of you. It is much more difficult to envision how you can take what is already there and change it to fit your needs to see the potential of what it can become. This requires some imagination and thorough planning.
Understanding what all needs to be done and the associated costs of repairs and upgrades is vital in turning an average home into your dream home. But if you can do it, you might just be able to get your perfect home in your dream location. With low inventories it might take re-gutting an entire house, to find your dream home within your budget, but it is definitely doable.
Look at houses that have been on the market for a while
As you search through various real estate finding websites it's very tempting to only look at houses that have just been added to the market. If you have been looking every day for the past few months, you have already seen all the old listings, right? While this may ring some truth, circumstances change and you do not want to limit yourself so much that you miss out on the perfect home.
We recommend trying a new search with no price filters and go through all of those that have been on the market for a long time. Chances are these listings are priced too high for the neighborhood, which is why they haven't sold yet. Talk to your agent to see if it is a viable option for you to put in a lower offer. Sometimes circumstances change and the sellers might need to move out faster than expected which can create the perfect storm. This can give you a chance to snag it before it is listed as a price drop online!
Once you do find the perfect home, you might need to be flexible with a few things to make your offer more appealing than other buyers. Here are a few minor things you can do to give you a slight competitive advantage.
Ask for fewer repairs
If you have a long list of all the repairs the home needs, the seller will most likely decide to go with the next option as it is less time consuming, and less money out of their pocket. You need to remember that in a sellers market, they have options so why would they go with the one that will cause the biggest headache?
If the repair is absolutely necessary (meaning no quick trip to Home Depot will fix it), then go ahead and ask. However, if you can fix it yourself, or hire someone for a reasonable amount we recommend not giving the seller any reason to not go with your offer!
Give on the closing date
Even if you’re selling your current home, there are a few ways you can still be flexible on the closing date. If you have to sell your home before you buy the new one consider a short term rental property or moving in with a family or friend in the interim. Allowing the seller flexibility on moving out makes your offer more appealing than one that requires them to rush packing.
Be ready to pay more...
With the market as tight as it is, the truth is sometimes it just comes down to the highest offer. I know it hurts to hear. But when a house gets multiple offers within the first few days of being on the market you might need to consider spending a little more in order to get your dream home secured.
See it first program
Here at Red Sign we have the “see it first” program, and it is completely free to you, no strings attached. Essentially, you give us your dream list of what you want in a home (price, location, # of bedrooms, etc.) and we will set those filters so that anytime a home comes up that meets your requirements it will be sent to you before everyone else has a chance to view it. This gives you a chance to snag up that dream home before the chaos ensues.
With such little inventory, desperation can start to creep in. You may find yourself putting an offer on just about anything just so you can get a home. We recommend resisting that urge and waiting until the right home comes along. There is nothing worse than getting stuck with a home that you hate and then having to start this process all over again in a couple of years.
With all that being said if you and your family are serious about making a move, put a plan of action in place and give yourself a timeline. You will need to make yourself available at all hours of the day to go look at homes with your realtor. In this market if you snooze you will lose. If you're in need of a real estate expert that knows the ins and outs of the market, give us a call at Red Sign and we will find you a realtor that can start your search today!