The pandemic changed the economy forever and no sector more so than real estate. These changes have been fascinating to observe as the entire world is following the same economic policies to counteract the disastrous effects of the event.
Here’s what happened in simple terms.
Pandemic = gigantic economic crisis
Central banks reduce interest rates to all time lows and inject never before seen amounts of cash into the economy to spur investment.
Low interest rates + trillions in new cash creates INFLATION.
Inflation gives people the feeling that they are making money from their investments while spending power is actually decreasing. Regardless of net effect, this gives the public confidence to spend their profits since profits become abundant across most sectors.
Rising investment values, low borrowing costs, and a desire for larger living space due to the rise of Work From Home, naturally drives real estate prices higher as the public begins to shuffle around and desire new spaces.
The average home in the United States gained $100,000 of equity since the beginning of the pandemic which in mortgage terms is actually not a rise in price at all since rates are lower than 2019.
In sum, rates + lots of new cash + public desire for larger living spaces = the hottest real estate market of all time. What will happen next, that’s for you to predict!
We can’t win the home for you, but here are three secret tips to increase the chances of getting your offer accepted!
Tip #1- Actively track number of “Saves” on Zillow for the home you are interested in.
Zillow is the most popular real estate website and the number of saves directly correlates to how many offers will be made on the home.
Assuming you have not done this before, look at a few of the “pending” or “under offer” homes in the towns you are interested in to gauge what a high, medium and low number is in your area.
For example, in the Long Island area of New York, a popular home will have well over 100 Saves prior to the open house. A “medium” number would be 50-60 and “low” would be less than 20 meaning the home is extremely overpriced.
Tip #2-Hire a buyers agent who is a local in the neighborhood you want to buy in.
Everyone and their mother is a real estate agent and many of them are excellent at what they do but in this hot market you MUST hire a local real estate agent. When people know you are looking to buy a home you get a zillion recommendations from friends, family and coworkers but don’t go with the family friend who lives 30 mins away, you need someone right there!
This is not a market for a real estate agent to gain experience or “help you out in your search” you need to know exactly what you want, decide quickly and have an agent who knows the important players in your area to get you the house. Even something as simple as your agent having to introduce themselves prior to sending your offer isn’t going to fly. This market is moving so quickly that a reasonably priced home is selling within 1-2 days of being on the market.
Unfortunately, the longer the pandemic continues, sellers have come to enjoy this quick turnaround and want “fast offers” and “quick closes” which leaves no time for your out of town or new agent to get their feet wet.
Many of our users have told us that it’s not even the highest offer that is being accepted, it is the “fastest” offer which can include the brokers knowing each other and trusting that the deal can finish as soon as possible. I for one would rather do things the right way and take an extra two weeks, but given how competitive the real estate business is for agents themselves, they are in fact using speed as a selling point.
Tip #3- DO NOT attend open houses, instead make an appointment to see a house.
Everyone thought the interest in open houses would have died down by now but they have not. With this many people interested in every single home, an open house is the least efficient way to view a home. You need to make a decision more or less on the spot on whether or not to make an offer and attending a crowded open house is not the way to get a good feel for a home.
I am not a real estate agent, but given the nature of Kabinet, I attend a lot of real estate events and view countless homes throughout the country to keep a pulse on what our users are experiencing. You must ask your agent to arrange an appointment even if it is only a 15 minute time slot to view the house without anyone else there.
The vast majority of sellers agents are agreeable to giving you your own appointment as long as you call right when the home hits the market. The reason they allow this is because it is a few days before the open house and they know it will impress the seller to say “We already have a buyer interested, they want to see the house ASAP!” The viewing process is the same, but at least you will have your own dedicated time slot and will not have the same agent rushing you like they would on open house day.
The Bottom Line
You can in fact buy a home in this market but you have to be fast. If you can hone in on a specific area and price range you will eventually buy a home, even if this continues indefinitely. Use these three tips to your advantage and let me know how they help you.