If you are shopping for a home right now you might be wondering what you need to do to compile an offer that will get accepted over other competing offers. It is typical in a more even market or in a buyer’s market for buyers to determine how much below the asking price they could offer on the home and still have the seller accept. Sometimes the seller would come back with a counteroffer and the buyer and seller would negotiate on a revised price somewhere between the original offer and the list price of the home.
But right now, it has been a competitive seller’s market for the last couple of years and buyers need to shop with different expectations as the real estate market is flowing much differently than we have seen in the recent past.
How the real estate market is different right now
Many people would say that the current business of buying and selling homes is unlike anything they have seen. The National Association of Realtors says that the average home receives 4.8 offers and sells in just 17 days. This is very different from statistics just a few years ago.
The new normal for the real estate market is to see homes selling quickly and receiving several offers where some buyers are doing things that may seem a little crazy to win out against the competition and become the new owner of the property. This is due to a very low inventory of homes and a high number of buyers all looking at the same homes.
What impact does this make on submitting an offer?
Current market conditions should always guide a buyer’s process in constructing a purchase offer on a property. Right now, the asking price or list price for a home is often the lowest number where negotiations begin rather than the top tier. Being prepared for this is important when you go to submit an offer on a home. This should be information that you keep in your back pocket while searching for homes you may want to purchase. You don’t want to fall in love with a home that will most definitely sell for a much higher price than you can afford.
Some real estate experts have advised home shoppers to expect homes to sell above list price, especially in highly desirable neighborhoods. They also advise that you shop just below your max budget so that you have plenty of room to make an offer above the list price should the home be in a highly competitive situation with many offers. You also want to be careful and aware of the possibility of an appraisal gap where more money is offered for the purchase of the home than the fair market value of the home.
An appraisal gap can create issues if you are hoping to finance the purchase of your home through a mortgage. Mortgage lenders require an appraisal to be conducted by a professional to ensure that they are not taking too big of a risk and lending out more money than the actual property is worth. In this scenario, if a buyer has offered more money than the fair market value, they are responsible for paying this difference in cash or walking away from the purchase because a lender will not lend more than the fair market value.
Whatever your strategy and the amount of knowledge you have about the property it is always the best idea to put together your best competitive offer on a home with the help of a trusted expert real estate agent.
For more information on homes in Carrabelle and surrounding areas and other Forgotten Coast real estate please contact us anytime.
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