Competition among homebuyers has remained fierce during the COVID-19 pandemic due to record-low mortgage rates, a shortage of homes for sale and a sudden wave of relocation from remote work, triggering a surge in home prices that is showing no signs of slowing.
The median home sale price rose 15% from a year ago to $322,000 for the week that ended Nov. 1 – the highest on record, according to Redfin, a real estate brokerage.
The housing market is so hot that offering all cash for a home doesn’t always cut it anymore, experts say. But there are things that potential homebuyers can do to entice sellers.
“What wins a bidding war today is offering more than the asking price and waiving the appraisal contingency,” according to Redfin real estate agent Anthony Gonzalez.
“Generally, if you’re bidding on a house that’s in great condition in a good location with multiple offers, you’ve gotta go at least $20,000 over ask. Every single time that my client does, they win the deal.”
To be sure, competition in the housing market has cooled slightly since the summer. The typical home currently gets four or five offers, compared with eight or nine in September, according to Redfin.
Still, home prices continue to buck their typical seasonal pattern since there are more buyers than normal at this time of year, experts say. And lower mortgage rates could push even more buyers to purchase a home in the final months of the year.
The national median home price typically peaks the first week of July and declines through the fall. This year, however, home prices have climbed 7.3% since the four-week period ending July 5.
If you’re looking to buy or sell a home, here are some other tips to keep in mind:
Don’t give up. Be patient. Homebuyers may have to bid on several properties before they beat out the competition for that dream home, experts say.
Work with a broker. A local Realtor will know how to sweeten the pot for that potential seller, and make your offer the most attractive, according to the National Association of Realtors.
Go the extra mile. Consider writing the seller a letter. Other financial incentives such as having an all-cash offer, shortening the escrow terms, waiving contingencies and offering more money will likely help potential buyers, Realtors advise.
Advice for sellers
Spruce it up . “Even in this tight inventory environment, homebuyers’ expectations have risen,” says Jessica Lautz, vice president of demographics and behavioral insights at NAR. “When they come into homes, they expect them to look like TV shows. They expect them to be staged. They’re attracted to beautiful photos online. … Those types of factors really do matter.’’
Don’t get greedy. “An overpriced home is still going to sit on the market,” says Jason Gell, president of the Greater Boston Association of Realtors. “With the right price, you’re likely to get a bidding war.”
Know where you’re moving before you hand over the keys. Have a plan for what you will do after you sell your home, whether that’s staying in temporary housing, or buying another property before the sale of your house closes, if you have enough cash.