Are We in a Buyer’s or Seller’s Market?
Many active buyers today falsely assume that this is a “buyer’s market”, and that they will be able to negotiate much lower than the listed price.
Homes which are well priced and marketed effectively tend to sell within a few weeks, and often with multiple offers – yes, even during the Covid environment! Because interest rates are around 70-year low levels, and fewer sellers are putting their homes on the market than typically would have by this time of the year, buyers are having much greater challenges. This is especially the case with homes in the median or lower price ranges.
Here are some tips based on many multiple offer situations our team has been involved in during this period. The basics are the still the same regarding buyers having a lender letter of pre-approval and verification of funds, augmenting the offer with a personal letter and often a photo, and making every effort to be sure the offer is presented in as acceptable a manner and form as possible.
However, the more successful buyers tend to be the ones who are psychologically prepared either before beginning the process or after having learned the hard way that hesitancy and “analysis paralysis” can be fatal in competing with others who are more committed and prepared. They usually have a clear idea of what their actual needs are, as opposed to various elements they might also like or want if possible. They understand that basing an offer on average prices per square feet may lead to either over-paying or under-offering, simply because of not factoring in other more significant aspects such as lot size, specific location, quality of views, condition of the home, etc.
Some Think That the Highest Bidder Will Always Win
That is not always the case. For example, an all-cash buyer with few and short contingency periods might be more appealing to the seller as compared with a buyer who may offer more money but asks for time to get a loan and a longer escrow period.
Many buyers today assume that they can get a better deal if they buy through the listing agent. They may not be aware that the agent has been hired by the seller to do their best job for that seller, whether they only represent the seller or also a buyer on that listing. In fact and in law, the agent has a fiduciary responsibility to the seller to get them the best price! Even if the agent agrees to give some portion of their own commission back to a buyer, the buyer may end up paying more for the property because of the agent’s legal requirement to act as a fiduciary to the seller.
No one has an infallible crystal ball to know where the real estate market or interest rates will be over the next year. However, if the demand remains strong for homes in a prime area such as ours, buyers who are not decisive and flexible may continue to be disappointed and frustrated at the process.