Here is some insightful information regarding how a fast-paced real estate market works from our President, Chris Mikus.
The current real estate market is at a fast pace. In the tri-state area, we are experiencing a seller's market with the inventory at the level of one month supply or less.
A balanced market typically has a 4-6 months’ supply of inventory. A buyer's market occurs when there is more than a six-month supply of inventory. Low inventory combined with historically low interest rates has driven the market in the past year along with pent-up demand due to the pandemic, homes are selling within days with multiple offers. Many homes are selling thousands of dollars over the asking price. Buyers can be creative to gain the competitive edge to be the winning offer.
Buyers need to be pre-approved by a mortgage lender before looking, or they will miss out on putting a successful offer in on a home they find. It is paramount that buyers complete this step before searching for a home.
Ways that buyers may make their offers competitive to win in multi-offer situations are:
Pay over list price.
Large earnest deposit.
Agree to pay the difference between appraised value and purchase price if the home doesn't appraise.
Waive inspections (not recommended by Realtors).
Pay both sides of the state real estate transfer tax.
Waive the mortgage contingency.
Write a "heartstring" or "love letter" to the seller (Please note, this potentially can be a problem under the Fair Housing Laws).
Agree to rent back to the seller while the seller finds a new home or set a prolonged settlement date for the seller to find new housing.