Make Sure You’re Not Iced Out of Your Next Home
With everyone focused keenly on what they need and want in a home (thanks, COVID-19) and historically low interest rates, what normally would be the start of the “busy season” in DC area has been intensified to the nth degree.
With supply (number of homes for sale) and demand (number of buyers looking) so mismatched, if you’re looking for a detached home or townhome practically anywhere, you’ll likely be facing a multiple offer situation. And, while escalation clauses and pre-inspections are not uncommon in our market normally, we are seeing the number of competing offers on homes rise (we’re talking 10, 20 and more) at the same time as reasonable contingencies mean you won’t even make the short list of offers considered.
Both listing and buying agents long for a more balanced market but, until then, if you’re looking to buy you want to make sure you’re prepared and persistent. Here are a few tips to get you in the right mindset (and please reach out if you’d like a one-on-one consultation to learn more to inform you next move…now or later).
Assemble the Right Team: You can’t do this alone, so you want to ensure you have an agent who is on top of the market, strategic and responsive. The same goes for your lender (let me know if you are interested in introductions to several of the best local ones) Remember that your offer is evaluated not just on the terms but also on the parties representing you. Are they good to work with? Do they deliver on time? You want to be able to give a resounding “Yes!” to those questions about your team.
Know the Market: With the help of your Realtor, start learning about the specific market (geography, price point, house type) well before you are ready to make moves if possible. This will help you mentally prepare for the challenges and sometimes tough decisions you will face (like waiving a major contingency) in your journey.
Know Your Numbers & Thresholds: Unless your name is Bezos (or another household name), you likely have limits — in terms of your finances and your risk tolerance. Work with your lender to model out scenarios and know what you have to bring to the closing table. You very likely will be faced with a situation where you may have to make up a difference between the appraised value and contracted sales price of your future home or assume risk by waiving an inspection (or, at the least, assuming responsibility for any issues you may find). Exploring what’s right for you in advance of writing an offer will allow you to be as aggressive as you can (and need to) be in this market while not setting yourself up to be house poor.
Act Swiftly: The DMV real estate market generally moves quicker than most of the country, and I’m not just talking about closing in less than 30 days. It’s not uncommon in this market for showing appointments to be gone before a house even hits the market. By getting ahead of listings while in Coming Soon status or through your agent’s network and relationships, you can ensure you have a chance to take a swing when you find a home that hits the mark. Your speed comes in handy well beyond the initial showing — from squeezing in a pre-inspection and meeting offer deadlines to closing quickly and on time.
Understand Types of Value: If your #1 criteria in a new home is getting a steal, now is not the time to buy. That being said, if you place value in quality of life and are financially ready, there’s no reason to wait. As always, think ahead to your five- and ten-year plans and consider your exit strategy. Since you will be paying a premium most likely, it may take longer for valuations to catch up and, as with all markets, real estate goes through cycles.
It’s a lot to unpack, which is why the first bullet is always the place to start. With a solid team and preparation, your next home is in sight!
Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.