Handling the Current Market
This year has been difficult for many industries and real estate is no different! Low inventory and COVID have made 2020 one of the most challenging real estate years I have ever experienced. But there is a lot of good news to report if you are thinking of selling. The market is really hot for selling right now! On the day I am writing this, inventory is at an all-time low. I am constantly watching the market and there are many statistics I like to keep track of in regards to market data in both our local market and in the state of Massachusetts.
Right now (as of writing this article), in Massachusetts we have about 12,000 homes for sale. Typically, this time of year we have about 19,000 homes for sale. We have had low inventory for a couple years now, but this is extremely low. Another statistic that I keep track of is the “absorption rate.” The market research shows that we have less than one month supply of available homes. So, we have a one month “absorption rate” right now--which basically means that if no new homes
came on the market for sale, and homes continued to sell at the same rate, we would be out of home inventory in less than one month.
Obviously, that never happens but it is a way to measure the inventory rate that we have. More homes are selling than are getting listed right now. That means the supply of homes continues to decrease. We are currently at an all-time low for home inventory.
What does that mean for you? If you are planning on selling in the near future, now is the time! One of the properties I listed a few weeks ago had 47 showings the first weekend. There was no open house due to COVID, but we allowed all private showings with safety restrictions during a specific time block for each buyer. And, 47 appointments were made, resulting in 21 offers. The house closed recently and went for $45,000 over the list price! This is just one example and would not necessarily happen on every listing, but it goes to show how high the buyer demand is right now.
So, if inventory is down by about 40 percent, what do you do if you are a buyer? In this market, I can’t stress enough the importance of having a good real estate agent. I have an offer package that I put together for every offer I submit on behalf of my clients. This often helps my clients win in bidding wars.
Agents need to be using strategies such as escalation clauses, increased down payments, or letters to the seller from the buyer. You have to plan to be more aggressive than you would in a buyer’s market. Make sure you are preapproved and that your preapproval is with a reputable mortgage company or bank and not an unknown. That can make a difference in my opinion.
Another tip is making sure you have a preapproval, not a pre-qualification. That way the list agent knows the lender has done more research into your finances and the offer appears stronger than if you have a pre-qualification letter instead.
If you have a home sale contingency, meaning you need to sell your current home in order to buy, that can be challenging in this market and you need to discuss options with your agent to overcome home sale contingency objections.
Flexible closing dates are important too. Timing is everything, if a buyer can be flexible for the seller that might make a difference in the seller accepting your offer over one with a tight timeline. The dollar amount is always important but there are more factors in putting together a strong offer package than just the offer amount.
Work with your real estate agent to come up with the best strategy to help get the house of your dreams.
Have a Real Estate Question?
Feel free to email me any of your questions and I would be happy to answer them next month in this column or directly to you. Email me at firstname.lastname@example.org