BY BRAD BELL
When I hear friends talk about the local real estate market, the word I hear over and over again is “hot”. For buyers and sellers its means fewer homes are on the market and prices are rising.
According to Realcomp MLS, the August inventory of homes listed for sale was down compared to the prior year by 33.5 percent in Wayne County, 29.2 percent in Oakland County and 41.4 percent in Macomb County. Year-to-date median homes sale prices are up 8.9 percent, 10 percent and 5.8 percent in those counties, respectively.
But want does that really mean if you are looking to move in the current environment?
For those getting ready to sell, this can all be great news, particularly for those selling homes that resemble the “after” of an HGTV renovation show. Updated homes which are priced competitively tend to go under contract in just a few days, often receiving multiple offers.
However, before sellers put the “For Sale” sign out they should they be prepared that deferred maintenance or over pricing a home can put them at a completive disadvantage. Even in a “hot” market, many still homes sit on the market for several months. Ultimately most sellers become buyers, so the advantage of the well-priced HGTV house can evaporate when they start looking for their next home.
For homebuyers, the lack of inventory can create a very frustrating situation as there are just not enough homes to meet demand. I have helped many buyers navigate this challenging territory, but it requires lots of patience and flexibility.
Being flexible on timing can greatly reduce client’s overall stress. Buyers under a specific move deadline are more likely to purchase a house that doesn’t meet their key needs. Buyers can select from a wider range of listings if they have flexibility on a lease end day, can make plans to stay with family or friends or are in a financial position to purchase their next home before having to sell their current one.
Buyers should also considering purchasing during a less busy time of year. In Michigan, home buying activity generally peaks between April and early July. The fall and winter can be great times to look as fewer buyers are in the market. Also buyers shouldn’t discount looking during the holiday season. With so many larger employers continually transferring employees in and out of the area, lots of sellers have to list during holiday periods. Buyers who are looking during the fall should not take a break during the holidays as they can miss some great opportunities.
Many of my clients want an updated, move-in- ready home, but this category of properties is where demand most exceeds supply. These homes often end up in a bidding war, and buyers with low down payment loans will find themselves less competitive in a multiple-offer situation.
Instead, I encourage clients to consider a house that may need some cosmetic updates. Homes that are structurally and mechanically sound but need fresh paint, new flooring or even kitchen and bath updates can be the right move for many buyers.
Location is the one thing about a house that can’t be changed. Sometimes to purchase in the location a client wants, they have to take on a house that needs work. For homes that need a lot of remodeling, many lenders offer special mortgage programs that allow buyers to finance renovations as part of their home purchase.
Lastly I would remind buyers that making the most attractive offer on a house is not always about price. Buyers who present strong mortgage approval letters, larger down payments, quick closing timeframes, short inspection periods and have flexibility to allow sellers to stay in a home after closing for a few weeks, often have an advantage in multiple offer-situations. If sellers can avoid a double move, that has real financial value to them. They may not take the highest priced offer, as that may not be the best offer for them.
Despite tight inventory, today’s low mortgage rates still make it a good time to purchase a home. With the tax advantages of ownership, many of my clients find their monthly cost of ownership well below area rental costs.
A successful home purchase just requires the right mix of planning, patience and flexibility in our “hot” housing market.