The low inventory of homes on the market is making it hard for buyers to find homes. Current housing inventory levels are at their lowest levels since 2004 for the month of March. As of today there are 18,546 homes on the market, 5% fewer homes than last year at this time when there were 19,600. When buyers do find a home they want to make an offer on, some are getting outbid on the home and have to start all over again.
So what should home buyers do this spring?
We are on the brink of the peak time to buy or sell a house the spring season traditionally very active time in the housing market and who better to give us a breakdown than our real estate experts John McGeough and Anthony Lamacchia of McGeough Lamacchia Realty good to see you this morning. How big is snow a factor here, do people say hey I don’t want to deal with it or if you want to find a house you’re going to look for a house anyway?
We’ve seen it delay things by just a couple of weeks but there is so much pent up demand right now that it hasn’t had as big an impact as you might have thought. The blizzard of a couple weeks past, that did impact us a little more, this one, we’re hoping just a little speed bump.
All right you guys have a few trends you’re going to share with us this morning as we head into the spring market and we saw this a little bit last year you guys said, bidding wars, Anthony, we’ve had them before and they’re going to be back is that correct?
Last year was the first time in at least a few years that we really saw them come back, this year I think it’s happening even more. We’re seeing them all over the place, last year it was just some hot towns, now we’re seeing them in many towns, it’s becoming much more common, and now I think buyers are more accepting of it, a year ago they were like, “what? How is there a bidding war?” Now it’s a little more common.
So does the seller say take an offer and sit back a little bit to see if something else is coming in or are they going to respond quickly?
Sometimes they do that it depends on the situation. And it depends on how much activity we’re seeing but sometimes the seller will say I want offers by a particular day maybe giving buyers 48 hours or so to respond. Sometimes it comes as a surprise, so you’re scrambling a little bit you’re putting together some type of schedule but ideally buyers should be aware they need to move quickly.
So if you see a place you like you better jump because it may not be there long.
That’s absolutely correct.
All right let’s go on to another tip you have here, work with a buyer’s agent. I’m not sure a lot of people know what a buyer’s agent is and what they can do for you.
That’s right, well it’s more common now but when a seller has their own agent, and that’s the listing agent and buyers in most cases have a buyer’s agent. But there are still buyers out there who think they can get a better deal or they can do better going at it on their own ,and to go at it on your own you got to call, you want to see 4 properties? You got to call each listing agent .
And it doesn’t cost you anything either you don’t have to hire one.
Right, because the listing agent splits the commission so it’s more important than ever now to have a buyer’s agent because of the fact that inventory is low you’ve got to move fast on properties and agents are going to have a better inside track in most cases than going at it on your own.
Especially experience-wise that’s important too in that area
No question, when you’re hiring the right buyer’s agent they’re going to give you some information that the listing agent may not be providing to you so as Anthony said exactly why some people don’t want to use a buyer’s agent is they think they can get a better deal themselves. Well guess what, if they have the right buyer agent no different than a sports agent or anybody else they’re working for you they’re getting paid from the seller, there’s a huge motivation for them to help you out.
Not a bad deal, actually, let’s talk about another tip, get pre-approved before you go shopping for that new home, that’s huge.
That’s a big tip that we put out there because when things were moving slower over the last few years buyers got accustomed to well I’ll get a pre approval when I find the house I want. No, you need to have a pre-approval in hand now, because if you go out on Saturday afternoon at 3 o’clock and see the house you like, and you want to make an offer, you can’t be scrambling to call your mortgage broker to get your pre-approval at that time. You’ll have to wait til Monday and you can miss a property, so you should have your pre-approval in hand and you should get it updated every 30 days.
That gives you an idea of how much you can afford.
Yes also get pre approval maybe on the higher side it doesn’t mean you have to spend that, but the seller always likes to that they’re pre-approved for more and sometimes you ‘ll be shopping and oh I forgot I got to go higher and that will give you that can discount your offer a little bit.
Are we now in a seller’s market?
Well yes It think so, I wouldn’t say it’s screaming hot seller’s market but last year we saw the balance come about where it was buyers’ market for 3 or 4 years, and then last year it was more balanced this year we’re definitely leaning more towards a seller’s market. But that doesn’t mean sellers can price their house any price they want or anything like that
Price is still key we know that. McGeough Lamacchia, John and Anthony thank you very much.
Here are 4 tips for buying a home in spring 2014 and making the home buying process easier:
1. Bidding Wars
Last spring we saw an increase in multiple offers on the same home and we expect to see this happen again this spring. The reason for more bidding wars on homes is there are even fewer homes on the market this year than in 2013. With more buyers and fewer homes for sale there is increased competition, which can trigger bidding wars.
Home Buyer’s Tip:
You are not the only one looking at the house so don’t waste your time offering too little for a home you want. If you like the home and think it’s priced well, chances are someone else will, too. Work with your agent to negotiate the right price so the seller accepts your offer.
2. Working with a Buyer’s Agent is More Important Than Ever
With so few homes on the market you need an agent who can do the legwork and find the right homes that fit your criteria. An experienced real estate agent will have an extensive network of contacts and may even know of homes for sale that aren’t listed yet. Remember that listing agents are contractually bound to act in the best interest of their seller— not you the buyer!
Home Buyer’s Tip:
Hire an experienced real estate agent who has dealt with many real estate transactions and can help you navigate through the paperwork, inspections, and any issues that arise. A buyer’s agent knows the trends in the market, what has sold in the neighborhood, and ultimately what will work best for you. So be sure to hire the right agent, because the wrong agent with a lack of experience could cost you tens thousands of dollars during an offer negotiation.
3. Get Pre-Approved Before You Shop for a Home
Most home buyers have a rough idea of how much they can pay every month on their mortgage. But the fact is they may not be qualified to borrow as much as they think. You don’t want to find the home of your dreams only to find out you’re not able to obtain the financing necessary to purchase it. Another thing to remember is mortgage brokers don’t typically work on weekends when most buyers make offers, so have your pre-approval in hand when you’re viewing homes. If you wait until after you’ve seen the home to get a pre-approval, the home could be sold before you get a chance to make an offer. In this competitive housing market, some home sellers are actually requesting that only pre-approved buyers view their homes because they know these buyers are qualified to make an offer.
Home Buyer’s Tip:
Have your pre-approval in hand even before you start looking, and have it updated every 30 days so you don’t miss out on getting the home you want. Getting pre-approved will make the mortgage application process smoother since you will have already spoken to a mortgage broker and gathered the documentation necessary for the loan. And if there are multiple offers on the home, having a recent, up-to-date pre-approval letter is a distinct advantage over a buyer who doesn’t.Request Pre-Approval Now
4. Be Ready to Move Fast!
Have your pre-approval in hand even before you start looking, and have it updated every 30 days so you don’t miss out on getting the home you want. Getting pre-approved will make the mortgage application process smoother since you will have already spoken to a mortgage broker and gathered the documentation necessary for the loan. And if there are multiple offers on the home, having a recent, up-to-date pre-approval letter is a distinct advantage over a buyer who doesn’t.
Home Buyer’s Tip:
As soon as you see a home you want come on the market, don’t wait to view it. Have your agent show you the home as soon as possible and be ready to make an offer. This is another reason why getting your pre-approval is so important.
This is a great time to buy a home. Interest rates are still low, and in some areas, owning a home is more affordable than renting. Although housing prices are showing slight increases, rental prices are increasing at a much higher rate. The Boston area rental market has seen a 5.5% year over year increase of rental prices* and this trend will likely continue.
But the low interest rates won’t stay low forever. Mortgage rates are expected to rise to over 5% in 2014, and home prices are also expected to increase in certain areas, so buyers should get into the market now.
Boston Rent Increases: http://www.wbur.org/2013/06/07/boston-rent-increase