When people talk about “the Housing Market,” it’s like talking about America – there’s a lot of diversity that is difficult to tie up into a neat little package. Every market is different, and part of being a successful home buyer or seller is figuring out the specifics of your market and using them to your best advantage.
Buyers in big markets, from the quintessential ‘big city’ to the super-suburban sprawl to other areas with a lot of homes and a lot of action, have a unique set of challenges.
A big city market quickly becomes a “seller’s market” when competition is hot. Across the nation markets are hearing up, not only in typical in-demand areas, such as the most desirable coastal cities and urban metropolises, but also in lesser-known parts of the country where business is picking up and jobs are bringing new people into the area. While a bigger area means more houses on the market and more entering the market every day, hot competition can cause home inventory to rapidly dwindle, especially the most desirable properties and neighborhoods. A desirable home can receive multiple offers (even sight-unseen) the minute it hits the big, hot market, making home buying very difficult. These fast competitive offer situations are great for sellers, because they can set their prices, conditions, and timeline to suit them, while buyers have to consider themselves lucky just to get any contract at all.
Buyers in a big, hot market still have a lot of options, but they don’t have a lot of time. The key to winning a property in a big, hot market is to move fast and offer high, with the hope of out stepping the competition. Other tactics include giving the seller valuable concessions such as providing closing costs, or crafting the offer to make the seller’s life easier such as waiving repairs. A popular tactic for those that can manage it is to offer cash. Cash sales are quick and clean because they remove the complication of a buyer’s lender, making them highly desirable to sellers (and their lenders). Many cash offers are made with funds borrowed from other sources, such as savings and investment accounts, family, and friends, and are converted into regular mortgages after the sale to pay them back.
The fast pace of a big, hot market leaves behind only the ‘unsellable’ homes: distressed properties and less-popular neighborhoods. Other unwanted properties can include short sales and foreclosures, which frequently take months of paperwork and hassle to reach closing, making them unsatisfactory to many buyers. In a hot market, because of lack of interest, these unwanted properties can still be deals for homeowners and investors willing to invest time and effort (and often a large sum of cash) to acquire and improve them. However, the opposite can also be true: even the ‘unsellable’ homes can become the subject of price increases and bidding wars when the market is hot and options are few.
A few tips to success in a big, hot market are plan, prepare, and anticipate. Plan your home search to know exactly what you need and want, and what you are flexible about; what you can live with, can’t live without, or won’t even consider. Get into the mindset of working with less-than-perfect properties to make them into your dream home, rather than hanging all of your hopes on winning one perfect property. Prepare by pre-selecting the areas and neighborhoods you want – tour them, look at the houses there, find out all of the local features, and determine current property values – even before any homes are on the market. That way when a home does hit the market you already know if it could be right for you. Anticipate the fast pace by having potential offers already crafted with your agent, so when the place you want shows up you can fill in the blanks and send off the paperwork right away.
Savvy buyers can be successful in big, hot markets with the right moves, good timing, and the right offer.
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