In 2020, we saw an unprecedented shift in the housing market. In fact, many are referring to it as “The Great Reshuffling,” since many moved from large cities into smaller towns when working from home became the norm. This ripple effect has continued to affect the market into 2021, and swarms of people are looking to buy.
With a large number of people moving into the market, it’s going to be a challenge for buyers to find homes in this competitive market. Coupled with spring selling seasons, buyers should be as prepared as possible and consider all options when looking for their new home. Here are three tips to get your buyers ready to find a home this year.
1. Consider the Long-Term
Because the way we live and work has been so affected, many are realizing that they aren’t tied down to a particular location anymore. Because of this, they’re using the pandemic as an opportunity to move somewhere they’ve always wanted but haven’t been able to in the past. If you’re working with a client like this, talk to them about their long-term plans. These could include needing office space because their company has transitioned to permanently working from home or another room to use as a home gym or baby room. However, it’s important to remind clients that now is not the best time to look for a fixer-upper property. While construction materials are already spread thin due to the pandemic, many contractors are also overbooked because of a rise in demand, both due to the booming housing market and backlog from last year’s shutdowns.
While buyers should be thinking about the kind of space they need, they should also think about how long they plan to remain in that location. If they’re only looking to move because they’re afraid of missing out on the housing opportunity, this probably isn’t the best time for them to relocate. Because it’s a seller’s market, many home prices may be inflated. However, if buyers plan to be in the area long enough to capitalize on their housing investment, it would likely be worth it to move.
2. Focus on Financial Preparation
While many are looking at buying a new home because interest rates are lower than usual, this is going to be a short-term dip. Eventually, rates will return. Remind clients that, while it’s always necessary to consider their budget before looking at homes, this is especially important now, as the economy is still in flux and lenders are stricter.
Especially when it comes to first-time buyers, encourage them to think about how much they’ve set aside for a down payment and what they can realistically afford in monthly mortgage payments, their potential mortgage rate and other property expenses. Let them know that lenders will review their income, credit history and debt, so they should avoid making any other large financial decisions in the immediate future if they’re planning to move soon.
Currently, another financial issue is a potential bidding war. Because there is a higher demand for houses than what’s available on the market, the chances of multiple bids on a property are high. One way to combat this is by challenging your clients to reduce their budget and look for houses around $50,000 less than their original idea. This way, if there are multiple bids, they’re still able to stay in the game because they haven’t maxed out their budget. Other ways your buyers could appear more attractive to sellers are by offering terms like “fast close” or writing a compelling buyer letter. However, one of the best but most challenging ways for buyers to come out on top is by giving an all-cash offer.
3. Examine the Timing
While the spring is already the busiest time in real estate, the lack of inventory and demand for properties will make this year even more hectic. Interest rates have been low and are currently rising, but they’re not likely to drastically increase immediately. During this time, neither first-time nor experienced buyers seem to have the upper hand. While experienced buyers may be more familiar with the process and be able to offer more money, first-time buyers aren’t attached to another property which means they may be able to close more quickly. Some of your buyers may not be in the right place to make this move and, as their agent, it’s important to do what’s best for them.
Ultimately, if it’s better for your clients to wait, be sure they keep you top of mind when it is time for them to buy. Add them to a drip campaign that gives them tips to financially prepare and make themselves more attractive to sellers, so they can be ready to move immediately if everything lines up. You can also ask them to follow you on social media, where you can give general updates about the market. Finally, keep them in the loop by informing them about new listings as they become available in case their perfect home comes up sooner than they thought.
While this can be a challenging time in the market, it’s not going to last forever. Ensure that you’re prepared now by staying connected with buyers and sellers in your area. Check out Homes.com Local Connect to learn how you can reach active buyers and sellers searching homes in your zip codes!
Mark Mathis is vice president of Sales for Homes.com. For more information, please visit marketing.homes.com.