What does an apple have to do with today’s housing market? Turns out it was the perfect stand-in for a parody on the supply and demand hysteria we see playing out among homebuyers when TikToker Shaun Johnson uploaded a video comparing an apple to a home for sale. Once the apple is put up for sale, bidders come chiming in, driving up the price from $5 to $120 within a matter of seconds, including one California buyer who at $100 said it was the “cheapest apple he’d ever seen.”
If you’re a mere observer to this “arms race” also known as the housing market dash, references like these are funny.
But if you’re actually in the race to buy a new home, it’s no laughing matter.
Here are some of the stories from the front lines:
• Desperate to find a competitive edge, buyers are waving inspections
• People started camping out two days in advance for a first-come first-served opportunity to buy a $1.2 million townhome in Santa Clara, California
• Higher lumber prices have added about $26,000 to the construction cost of a new home according to the National Association of Realtors
• Buyers are writing love letters to sellers even though they put themselves at higher risk of violating fair housing standards
• When looking for comparative sales to determine value, I’m now looking only two months back because values have escalated so quickly.
What’s a buyer to do?
Here are some suggestions:
1. Look for houses under your price limit to give yourself room to offer more than the list price.
2. Get loan approval subject to an appraisal. By going through the approval process, you come out with an unconditional commitment by the lender who has verified all your data to grant you the mortgage subject to the appraisal. This is better than being pre-qualified which merely gives you an idea of how big a loan you’ll likely qualify for and is solely based on consumer-submitted data. And it’s better than being pre-approved which is based on verified consumer data but still doesn’t have the guarantee of an underwriter to back it. Sellers will consider an offer from an approved buyer a much stronger one than from a pre-qualified or pre-approved buyer because it indicates the buyer’s financing is guaranteed, subject to the appraisal. It can also shorten the escrow process which many sellers also consider a plus. Finding a lender to go through this process with you can be challenging but is well worth it and is one of the services a Realtor like myself can help provide, having worked with reputable lenders who are willing to work on this basis.
3. Consider offering perks like: offering flexible occupancy dates if the seller needs extra time to find a place to move; offer to pay to remedy inspection problems up to a certain amount (I would never recommend waiving the inspection nor waiving all rights to remedy inspection problems. I recently was involved in a deal where the buyer offered to pay up to $2,500 to address inspection problems; however, when the inspection exposed a mold problem with a price tag of $20,000, the seller agreed to pick up the tab for the rest of the cost.)
4. Have a good understanding of your long-term plans. Chances are you may end up paying top dollar for a home in today’s market. If you plan are living there for several years, you give yourself enough time for natural appreciation rates to protect your investment. However, if this is a short-term plan, you might be better off waiting until things cool down.
5. Be willing to invest some sweat equity along with your finances. The house with all the bells and whistles is going to have the most suitors standing in line wanting to win the prize. Consider listings that may be a little outdated or need more TLC and you might have more of a fighting chance (but be sure to factor in the cost of the renovations in the price you end up offering).
6. Work with an experienced Realtor. In a market like today’s, you really need the advice of an experienced Realtor to navigate the playing field. I have counseled some clients to wait until things open up more. I’ve also cautioned clients from bidding more than I thought they could recoup when it comes time to sell. More than ever you need a Realtor who will be honest with you which means you may not always hear what you want to hear, at least not in the heat of the moment. But such advice is a good antidote to buyer’s remorse.
Let me help you buy or sell your next home. I’ve been a Realtor in Lake Oswego and the Portland metro area for over 30 years and I’d love to put my experience to work helping you navigate today’s real estate market. Give me a call at 503.939.9801, email me at email@example.com and/or check out my website.