House Hunting In A Bananas Real Estate Market

Back in January, we wrote an article on how to prepare yourself to purchase a house. But could any of us really prepare for the bananas real estate market we’ve witnessed this year?
 
A large majority of homes that are selling are getting prices that are above the asking price. One of the accusations we’ve heard is that Realtors are pricing the homes too low. That is part of the story and it’s a valid accusation. The other half of that story is “what are the buyers willing to pay”? Obviously a lot and in large part, this is beyond the agent’s control. Buyers will pay either what they think they need to in order to win a competition or, what they feel the home is worth to them.
 
Way back in January, Buyers were developing an expectation they would need to pay over the asking price. In our Region, that mind’s eye dollar figure is easily $50,000, $100,000 or more over the list price. With that in mind, it became challenging for an Agent to actually price the home at market value because in the Buyer’s mind, they would be paying much more than that. So, a home actually priced at market value became, in the Buyers mind, over-priced. Therefore, agents continued with a lower pricing model to attract foot traffic, knowing the market would take the home to a higher level. In my career it’s the first time I’ve seen this model get entrenched on such a massive scale.
 
I, along with many of my Realtor colleagues look forward to the day this practice ends. For now, if we tried to end it by pricing at “market value” our home-seller wouldn’t get the volume of foot traffic that lower-priced listings are getting. The home would look over-priced in comparison and we would be doing our clients a grave injustice. COVID has turned the world upside down and taken real estate along for the ride.
 
So what can you do as a Buyer in this challenging market? Many Buyers become discouraged and retreat while others push on and end up buying the home of their dreams. Here are some tips to help you succeed”
 
Patience – you’re probably going to fail and face rejection, multiple times before you succeed.
 
Know Your Limit, Stay Within It – It’s critical to have financing lined up. It’s equally critical to have a very good, first-name basis relationship with your lender. And in this fast market, it’s even more critical to be able to speak with them and get answers during the evenings and weekends. Buying a house right now is like fighting a battle, and battles don’t adhere to “banking hours.”
 
Be Optimistic – even in the face of rejection attitude is everything. Losing is even tougher on your agent than it is on you. By this time we have a lot of time invested in showings, offer drafting, researching comparable listings, talking with you, gathering signatures, negotiating with the listing agent, waiting by the phone etc. We’ve just lost the one thing we can’t replace, time. But your agent will likely be the first person who gets up, dusts themself off and says “let’s get right back to it”!
 
Shop Below Your Approved Amount – Way Below
If you’re approved for $600K, you need to be looking at homes priced in the $400-$450 range in our Region. Scary but that’s the bananas until things correct; if they correct.
 
Consider Fixer-Uppers – the nicest homes go first and attract the highest dollar. Most people don’t want or don’t have time to fix up a home but that’s the fastest route to increasing your equity, especially if you have the skill sets. You may be able to buy a property with little or no competition this way.
 
Have The Deposit Ready – the deposit represents your “goodwill” to the seller that you’ll actually complete the transaction. Buyers are giving higher and higher deposits. It’s not uncommon to see them in the $20,000, $30,000, $50,000, $100,000 range. The deposit can help you compete against other Offers i.e. my deposit of $50,000 is going to look a whole lot better to the Seller than your deposit of $10,000. It must be delivered to the Listing Brokerage within 24 hours of acceptance. If not, the deal can be negated so you need to have it liquid and ready in to go.
 
Have Faith – a little divine guidance can help during these stressful times! Know that you can succeed; other Buyers are so why not you? Don’t do it alone and don’t do it with the Listing Agent; it won’t save you any money and may cost you in the long run.
 
Want to chat? Pick up that phone and dial us! We’re always available and we love helping Buyers achieve their dream! Call us at 905-442-5847 or email us at team@williamsandfollows.com. And follow us on social media too!