(updated from original post in 2016)
Like much of the country, Thurston County is experiencing record home buyer activity. To listen to much of the housing market commentary around the country, one would think buyers don’t have many homes from which to choose. That talk centers on lack of standing inventory of homes for sale.
While our market’s standing inventory is quite low, only a few times in our market’s history have so many homes come available for sale. The number of homes listed this year is at an eight-year high.
However, the record number of buyers are putting most homes under contract soon after they are listed. Well-priced homes are selling in an average of 14 days, most of the time with multiple offers.
The challenge for buyers in our local market isn’t so much lack of choice as it is the quick, competitive pace of the market. Given this environment, here are five tips for today’s buyers.
1. Get prepared by working with great professionals. Your first priority should be working with a full-time real estate brokerage that knows this market well. With so many details involved in buying a home, there is no substitute for having a great broker on your side.
Next is your lender. Loans are not a commodity. The process of getting a loan is mostly about the service. Interest rates are still competitive among various lenders, but not all are equally capable of navigating the complex mortgage business. Smart sellers pay attention to competing buyers’ lenders. An otherwise attractive offer may be passed over in favor of one that has a more reputable lender with a track record of getting things done right and on time.
2. Know your budget. The best lenders help you with both your financial capabilities and your financial comfort. There is an important difference and it is crucial to understand before getting into a hot market. Taking time to discuss these options will give you buying confidence.
While we’ve been in a seller’s market for nearly 4 years now, this year’s market is the most competitive. Multiple offers were common throughout the past four years, but what is different today is that 51% of the well-priced homes are selling ABOVE list price. With that reality, appraisal support becomes an issue. It is hard for appraisers to keep up with the actual price appreciation that is occurring in our market. That is because they are looking in the past as recently sold comparable sales, whereas buyers are competing in the current market, which is more competitive every day.
In these circumstances, today’s buyers are also asking how they can make their offer look better. Many are electing to put additional money down on the loan to cover some possible shortage on appraisals. When this occurs, the trick is having the broader market knowledge and confidence to know the difference between a supportable amount and something that unreasonable or unnecessary. This is where a great broker can help you make sense of this fast-paced market. Together with your lender, knowing your budget and all the possibilities, a savvy buyer can make a winning choice.
3. Know what you want – and don’t want. Determine your must-have features from those that would simply be nice to have. Be willing to compromise – but only on some things. Be aware of things that cannot be changed, or at least are very expensive to change. The location of the home is the biggest contributor to its value – and it cannot be changed. Also, if a home does not have the desired floor plan, consider how much it would cost to achieve a better layout. The cost of such improvements can range from modest to prohibitive.
Keep an open mind about improvements that can be made over time. For example, paint is an easy, affordable update. Features like flooring, cabinets and countertops can be done over time. The right home may just need a little work for it to fit your needs.
In this market, we are finding that a little money put into improvements is paying big dividends when it comes time to sell. The key is picking the right things to improve, and how to improve them. In most cases, the best changes for resale turn out not to be the most expensive or complex.
4. Know the market better than the competition. In this market, uncertainty leads to either jumping in too fast on the wrong property or hesitating and missing out on the right one. Work with your broker to understand the current market dynamics. Every area, property type, price range, and individual home has a different market dynamic – and each call for a different approach.
5. Be tuned into the market everyday – the best home may not be on the market. yet. The higher levels of homes coming on the market means that if it isn’t there for you today, it may be tomorrow. Work together with your broker to keep a look out for new listings. Through networking, the internet and social media, you may even hear of a home before your broker. If you do, get with your broker right away to determine if it truly suit your needs.
6. Work with a full-time, local broker. Every market is different. Each has a dynamic that calls for different approaches to structuring an offer. Ours doesn’t require the same things that are needed in Tacoma or Seattle. For instance, waiving inspections in those markets might be common. It is not in our market – and thankfully so. There are some things that you can do to strengthen an offer to be competitive, and some things that simply shouldn’t be done. Waiving inspections is one of those. We have many techniques to help a buyer be competitive, while not risking too much.
By following these tips, and staying in close contact with your broker, you will be ready to go when that right home hits the market. We would be happy to assist.
