Through the years when the cycle of real estate turns to a low-inventory situation a savvy buyer must decide to shop in the correct price range to counteract the leverage sellers have in the market. When one hears of buyers attempting multiple offers on homes and not being successful, it might be helpful to analyze what price point they should be looking at and constructing offers accordingly.
Aa offering price in the Multiple Listing Service is a price the seller and his/her agent thinks the property will appraise generally speaking. The sellers and list agent may believe that the property could attract higher/better offers but there is less chance for that to happen if the property is listed too high and not viewed by the buyers middle to top range of that particular price point. Using comparable sales is becoming more challenging due to the low inventory of homes. Sometimes agents act with an element of caution because what is critical to any listing to sell well is to generate interest from a pool of buyers can obtain the home if desired.
Obtaining a home in a low inventory market will require a realistic approach. As a buyer, do you have enough money, at least 20% down to be attractive to a seller? Do you have reserves to waive a partial amount of all of the appraisal if it should come in low? Can you accept the property in the condition it is being offered at without financial hardship? Better yet are you making an offer on a house that makes sense as far as affordability?
When I hear of buyers that are heart-broken over not getting a home it makes one think should they keep doing the same thing or change his/her strategy? How about shopping down on the price range? Lower your expectations and raise your chances of success. Many first time home buyers do aspire to have the perfect home but often a first home is a home you reside for 3-5 years statistically. Can you handle a home not near the perfect AP scoring school if you don’t have any children yet? Can you live in a different part of town that adds five to ten minutes to your commute? Can you buy the ugly duckling on the street and put some sweat equity and product into it to make it look and feel like the one that just sold for multiples a month earlier?
The seller’s market we are currently in is strong. A seller can have power and leverage. If one wants to be a successful buyer in this market, one has to look at the potential offer you make in the mind of the seller. If one can’t make these adjustments, it might be better to save more and wait for a market cycle change to realize a successful home purchase.