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Buying a Home? How to Set Expectations For Success
Dated: October 16 2020
Do you plan on buying a home soon? You're not alone. The National Association of Realtors (NAR) reports that in August 2020, existing home purchases were up 12 percent from a year ago. This is despite a 10 percent increase in the sale price of like properties in the same time period. Crazy huh?
Why have homebuyers hit the market in groves during a pandemic? The most prevalent reasons are interest rates and telecommuting. Interest rates are under three percent in many areas, and telecommuting is on the rise. Many buyers are moving from metro areas to the suburbs, which has caused prices in some areas to skyrocket. Others are selling their homes for high profits and buying out of state. This is causing an influx of people to warmer climates, which is driving up costs there. The South experienced 43% of all home sales, according to a NAR report.
The sudden increase in buying activity, combined with people staying in their homes longer, has caused a housing shortage. The decrease in inventory means that buyers have to reset their expectations when looking for a home. What was true six months ago is not valid in Fall 2020.
Here are a few tips to help reset expectations in homebuying.
Be Prepared - Prices Are Going Up
In the early summer, The Yost Group produced a video that referenced new construction prices in the Greater Bluffton SC area. At that time, you could purchase a new home starting at about $250k. Now, only a few months later, that same home is about $268,000.
Construction costs have skyrocketed due to a lumber shortage as well as high demand for new homes. At first, the builders tried to absorb the cost, but eventually, they had to increase their base prices to offset their losses.
Resale prices are also going up, but it depends more on the area. If the home is located in a place where more people are moving than homes for sale, houses will be over the asking price, and multiple offer situations will occur. Resale homes in some areas are under contract in less than 24-hours.
Be Ready to Make An Offer When You Find Something You Like
Whether you are looking for new construction or an existing home, you will need to be ready to buy when you find a home that ticks most of your boxes. Buyers' who sleep on it are losing out to buyers' that are ready, willing, and able.
Once you're serious about buying, have a prequalification letter ready to go with your offer. Sellers do not always accept the highest offer. Often, they take the cleanest offer. A clean offer has proof of ability to purchase and few contingencies.
Be Realistic When Considering Wants vs. Needs
Too many buyers pass up homes because they do not check all of their wants. They miss out on great homes to find the house that doesn't exist.
Unless you are building from scratch no house will have everything you want. Many homes will have most of what you need so don't say no without consideration. Many wants, such as flooring, paint, crown molding, and countertop finishes, can be added at a later date. Things that cannot be added later are structural and location.
Keep in mind that the more perfect the home the more you will pay. Turn key move-in ready homes are selling for a premium. You can save money by completing cosmetic changes at a later date.
Reset Your Expectations When Buying in a "Hot" Location
All areas will have locations that are "hotter" than others. If it is a must that you purchase in a popular location be prepared to pay more and make an offer fast. If living inside the "hot" area is not a need, consider moving a few miles outside of it.
A couple weeks ago we were with clients that priced a new construction home in the middle of a "hot" area and it blew their budget. When pricing the same home by the same builder ten minutes in the opposite direction the price came back $50k less. Keep in mind that many outlying areas are up and coming and many times appreciate faster than overpriced homes in the hotter areas.
Hot markets do not mean that you shouldn't move forward with plans of buying a new home. It does mean that expectations will need some tweaking.
It's not a good idea to put off buying because there is no guarantee that prices will come down or interest rates won't go up. Move forward with any plans you have to buy a new home. Listen to your Realtor and adjust your expectations for success in the current market.
And, if you are looking to buy or sell a home in the Greater Bluffton area of South Carolina, The Yost Group is ready, willing, and able to help. Call or text us at 843.707.6956 or email us at firstname.lastname@example.org.
Missy has made a career out of helping people navigate life’s biggest decisions. She wants everyone to have a positive experience when buying or selling a home, and her greatest goal is to help othe....
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