One of the most common refrains that has come out of the very hot 2020 real estate market is the message that this is a perfect time to sell a home. Record low interest rates combined with a low inventory market and a shortened spring market means that demand is high and, in many areas, homes are selling for prices well above asking with multiple offers.
Of course, the other side of that equation is that the homeowners who are selling those homes may be unsure about how and where to find a new home on the other side of the closing table. After all, unless they are relocating to a previously purchased second home, these sellers may find themselves competing with other eager buyers on their new home purchase. How can you buy a home in a low inventory market and improve your odds of finding the right home at the right price?
New Construction
One of the early Industries interrupted by COVID-19 shutdowns was home construction, and in many areas, new construction ground to a halt. However, a number of home builders have since returned to work so now may be a great time to find a beautiful, newly built home. In addition, many new home communities boast resort-style amenities and expansive outdoor spaces, so they make a great choice when other recreational options are limited.
Resort Areas
Because of travel restrictions and the reluctance of many families and senior adults to vacation this year, resort areas offer some great options for hopeful homebuyers. Properties previously owned by investors may be on the market as their owners reconsider their investment strategy. Bonus? Many of these properties will feature upgraded finishes, pools, spas, and other amenities that make them particularly desirable right now.
Rural Markets
With the rise of work from home (WFH) as a permanent solution for many businesses looking to hedge their bets going forward, rural markets seem to be enjoying a moment. Offering larger lot sizes, wide-open spaces, greater privacy, and plenty of natural beauty, as well as uniquely affordable home prices and lower demand, a home in a rural market may just be a perfect option for you and your family.
In-town Markets
As young professionals abandoned hip urban neighborhoods in order to quarantine at home with Mom and Dad in the suburbs, they left behind a host of updated condominiums and lofts in cities all over the country. This may be a perfect time to purchase a home in a desirable downtown area with an eye toward the day that shows, restaurants, and shopping are all back to normal.
Tips to buy successfully in a low inventory market
How can you create a strategy to ensure that selling your home won’t leave you at loose ends on the other side of the transaction? Here are some ways to increase your odds of finding the perfect home in today’s market.
1. Line up a rental to buy yourself some time.
Remember, you don’t have to make a decision on your forever home right away. Finding a rental home either in your current market or in the market where you are looking to relocate may allow you to take some time to look around and decide on the perfect next home. Many short-term rentals even rent by the month, so you can store your belongings and set up camp in a beautifully appointed, perfectly polished space while you weigh your options.
2. Coordinate with your agent so you’re ready to move.
Talk to your real estate professional about your goals and let them help you develop options to facilitate a more successful move. Strategy and smart negotiating are the keys to successfully competing in a multiple-offer situation, and your real estate professional will have plenty of ideas about how to make your offer more appealing.
3. Be willing to do some repairs or renovations.
Gone are the days when you could absolutely expect a perfectly turnkey home at the end of your buying process. Many buyers are sweetening their offers with information-only inspections and a promise that they will not request repairs during the contract period. If you are an experienced DIYer or know a reliable contractor, you may be able to craft a winning pitch to sellers by handling needed repairs on your own.
4. Leave some wiggle room at the top of your budget.
In many multiple-offer situations, hopeful buyers end up outbidding each other and paying well over asking price for their dream home. Don’t max out your budget on your initial offer but leave a little space to allow you to improve the deal if someone else shows interest.
5. Think about your long-term goals.
Instead of thinking about your current needs or those that are just a few years down the road, consider this purchase as part of a long-term real estate plan. Maybe this is the time to buy the vacation home or retirement condo that you had plans to move into several years from now. Maybe you’ve been hoping to get into real estate investment and now is the time to buy a duplex, fix it up, and rent out the other side. Later, you can use both sides as a rental property and purchase a primary home of your choice, when market conditions are more favorable.
The most important aspects of buying a home in a low inventory market are staying flexible, keeping informed, and consulting with your real estate agent or broker. They can help you make better decisions and put together a plan of action that allows you to maximize the potential value of your current property without giving up anything in your new property.