Remember when buying a home meant getting a deal well below the seller’s asking price and having your pick of many available properties? Nationwide, those days of a buyers’ market have come to an end, and Southeastern North Carolina is no exception. If you want to purchase a home and haven’t had any recent experience making offers, you might be surprised at what you’ll find in store for you.
There are three main obstacles you’re likely to face when shopping for a home in the current market:
Expect a low inventory of available homes in the current real estate market. To put home inventory into perspective locally, for the first quarter of 2017 in New Hanover County there were 3.0 months of supply. That is the lowest figure since the first quarter of 2006. Inventory in New Hanover County hit a high peak of 22.6 months in the second quarter of 2009 and has been steadily declining since then. It finally dipped below 5 months in the fourth quarter of 2014, and the sellers’ market has been heating up ever since. The lowest supply figures, all 3 months or less, are for homes less than $100,000 up to $319,999. The figures jump over 5 months for homes in the $320,000-$349,99 range, dip again below 5 months for those in the $350,000-$499,000 range, and then jump above 6 months for $500,000 and beyond.
Outlying counties have a little more available inventory, with first quarter 2017 supply figures at 6.1 months for Brunswick and 4.7 months for Pender.
A normal market, with a supply of homes that meets buyer demand, occurs with 5-6 months of supply. Anything above 6 months of supply is considered a buyers’ market, with the supply of homes exceeding buyer demand and sellers pricing properties competitively for a quick sale. Anything below 5 months of supply represents a sellers’ market, with the buyer demand outpacing the supply of homes.
As mentioned above, don’t expect to make a successful offer for significantly less than the listing price in today’s market. In fact, you may have to offer a little more if you want your offer to stand out and be accepted. The limited supply of homes on the market means prices go up, so a discounted offer will likely not even be considered. This does not mean you should overpay for a home, however. Your real estate agent can research “comps” for the neighborhoods where you are considering moving, which will help you determine a price that will respect the current market but also protect your investment’s future value.
With many potential buyers and a short supply of homes, be prepared for a bidding war over many of the properties that catch your interest. You probably won’t be the only one trying to jump on a good opportunity. Let your real estate agent be your guide during the negotiation process.
So what’s a prospective buyer to do with all of these cards stacked against him or her? While you may need to prepare yourself for a fair amount of frustration and disappointment while searching for your next home, don’t give up hope. Here are some tips for making the process a little less painful:
Find a knowledgeable agent
Because sellers pay commission on their end, it doesn’t cost you a thing to hire a real estate agent to help you navigate the tricky waters of the current market. An experienced agent has tools that will allow him or her to know immediately when a property comes on the market or even earlier through word of mouth. A number of homes in this area have recently gone under contract due to buyers hearing about them before the listing became official. This expertise will save time and increase your options in a market with limited options.
With sellers in the driver’s seat, in addition to making an offer at or above the listing price, you may have to make some concessions regarding the earnest money deposit, closing date, contingencies, and closing costs to make your offer more attractive. Expect that you will be competing against others for the property you want.
Talk to a lender
Before making an offer, you definitely want to be prequalified by a lender. Without this, a seller won’t know whether you’ll be able to obtain a loan for the home and might think you aren’t taking house hunting seriously. In this market, that’s basically a guarantee that your offer won’t fly. It is better that you go ahead with preapproval, which involves submitting a mortgage application complete with verifying documents.
Write a personal letter to the sellers
Another way you could make your offer stand out is to let the sellers know a little about you and your family and why you love their home. Some sellers may have an emotional attachment to their property and want to see it go to someone who will enjoy it as much as they have.
If you really want to buy a house in this market, treat the process like a job, not an afterthought. Don’t expect a listing to be available if you wait until the weekend when you have more time. You need to be ready to see a house right away because it’s possible there will be multiple offers within hours. If you don’t make yourself available for immediate showings, you could miss out on many opportunities.
Make a plan
Are you looking to buy and sell simultaneously? Intracoastal Realty clients Tom and Adrienne Wunder of Wilmington found themselves in a tricky situation when they did this recently. Their home went under contract within hours of listing, but due to the hot sellers’ market they were unable to secure their next residence right away. After the sale closed, they were able to rent their previous residence back from the new buyer for a month before finally finding and closing on what they wanted. The Wunders joked with their agent that they might have to move in with her. “It was touch and go there for a while,” Tom said. “We probably couldn’t have done this without Intracoastal Realty.” Other housing options when your property sells faster than you can buy another include moving into an apartment or other short-term rental and crashing with family while renting storage for your items.
There’s no time like the present to start your home search, especially with the current market conditions. Let Intracoastal Realty work for you and put you where you want to be. We are a full-service real estate brokerage operating since 1976, and we currently have 13 offices with over 400 agents and staff to serve Southeastern North Carolina, including the areas of Wilmington, Wrightsville Beach, Carolina Beach, Kure Beach, Southport, Oak Island, Ocean Isle Beach, Leland, Hampstead, and Topsail Island.
In Part 2, we’ll look at the current real estate market from the standpoint of sellers. Many have experienced lightning-fast transactions with multiple offers above their asking prices.