Sellers Market? Buyers need to act fast on purchase and come to the table with full offer…

Bidding Wars Erupt as U.S. Supply of Homes for Sale Falls- Bloomberg

 

Buyers are being squeezed out of deals all over the country as the supply of homes for sale shrink.  In markets like Phoenix, the supply of homes in February was down approximately 50% from 2011 at the same time.  This phenomenon is bridging the gap between the market bottom and the recovery and is actually forcing sales prices of homes up.  Buyers are coming to the table with full price offers, $1000 more than list price, $10,000 more than list price and in some cases, buyers are even offering to pay for some costs that sellers would traditionally pay for.  Over time, this is great news after years of a faltering real estate market in America.  As sales prices go up, market values of homes also go up.

What buyers should know?

1.) Get pre qualified first- Do not look at any homes till you have met with your mortgage lender and know just how much money you can borrow.  Also, a prequalification added with your offer, indicates to a seller that you as the buyer are serious about buying their home.

2.) Be prepared to come to the table with a full price offer (or higher)- There are many other buyers out there and they are looking at the same reduced inventory that you are.

3.) Act fast- The time to deliberate over homes has gone.  In a matter of 2 or 3 hours, homes are seeing multiple offers on them.  Do not procrastinate about your purchase.  If you like a home, make the offer on it sooner rather than later or else you may end up paying more for the home that you want to out-bid another potential buyer.

4.) My appraisal came in at what?- As the market shifts and buyers are paying more for homes, appraisals are on a lag.  Appraisals are done using comparable sales in a neighborhood for the past 3-6 months typically.  It is going to take time for higher priced comps to be used in an appraisal.  What this means is that the value derived in your appraisal for your purchase could come in lower than the agreed upon sales price.  If this does, you the buyer, may be the one having to pay for the difference rather than the seller as they know that if you walk away from the deal, they could have 5 other buyers waiting to make an offer too.

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