Buying a Home in a Transitioning Market
If you’ve been looking to purchase a home recently, you may have noticed that the feeding frenzy has started up again in the Sacramento real estate market. While we don’t see multiple offers on all homes, buyers are flocking to certain areas, creating that bidding situation we’ve seen time and time again. The average number of days that it’s taking for homes to sell has decreased significantly over the past eight weeks, indicating that the spring/summer season will be very active in our region.
While not all neighborhoods are the same, for the most part, every area is experiencing a critical shortage of inventory. Basic supply and demand tells us that when three buyers want the same home, and there can only be one winner, as a buyer, you’ve got to put your best foot forward. If you’re among the many buyers who seem to find yourself in a multiple offer situation each time you make a decision to write an offer, that only means that you’re searching in a highly sought-after area with little inventory, or in a hot price range or both.
Understanding the Market
Understanding the market in your neighborhood of choice is critical to knowing how to structure your offer. Finding out what the average days on market is for an area helps you to understand the urgency. In an active market, you may not have time to ‘sleep on it’. If homes in the neighborhood typically only stay on the market for a few days, it’s critical that you move quickly when you see a home you like. Waiting until tomorrow may be too late. Do your best to not get discouraged when you find out there are multiple offers. That only means that you’re fighting over something that others sought after, which is a positive.
Relatively if there are homes that have been on the market longer than normal, it doesn’t always mean that something is wrong with the property. It could possibly mean that the seller started with a price that was too high for the market. As a buyer, don’t disregard the homes that have been on the market longer than normal. You might be surprised to find a discouraged, motivated seller who is just waiting for an offer to cross their path. Or… you may find an unrealistic, stubborn seller that thinks their house is worth more than it is. Either way, it’s worth a try if the house meets your needs. It doesn’t cost anything to write an offer, but don’t waste too much time with a seller who doesn’t understand the market. While you’re trying to convince them to take your offer, you may miss out on something else that’s better. Remember, ethically you shouldn’t be writing offers on more than one home at a time.
Here’s the Truth of the Matter
There are a lot of over-priced homes languishing on the market that are not going to sell unless and until the sellers reduce their price or the home is better prepared for sale or both. With this in mind, when a clean home does come on the market, you need to be ready to go. It may be your first time out looking with your Realtor or your tenth. Either way, be sure that you’re mentally ready to put your offer on the table when you see something that checks all of your boxes.
This year it’s predicted that we’ll see an appreciation increase of 3% to 4%, down from the 10% frenzy of previous years. With price increases slowing, the result will be fewer homes being flipped. Taking some of the cash investor-buyers out of the equation will give us a more neutral market. Those cash buyers may be who you were competing with the last time you tried to buy a home. This is a welcome sign, especially for first-time buyers.
If you’ve been exhausted by the disappointment of getting your hopes up once you’ve found the home of your dreams, only to have those dreams spoiled by a bidding war, you’re not alone. Good news for you is that the market is transitioning. Whether you’re buying your first home or moving into a home that better suits your needs, I think you’ll find that our current market is providing a more equal playing field to both buyers and sellers.
If you’ve considered making that move before but didn’t, it may be time for you to jump back in!
Carol Kellogg is a Realtor living in Fair Oaks, California. She started her career with Lyon Real Estate in 1992. Over the past 25 years she has sold hundreds of homes, focusing on the importance of the customer experience. Representing both buyers and sellers, her goal is to provide quality service with a personal touch. Whether it’s a first-time buyer or seller, or a seasoned veteran in the world of real estate, Carol brings an element of experience and confidence that her clients appreciate.
#1 Realtor in the Lyon Real Estate Fair Oaks Offices 1998 – 2002.
Masters Club Outstanding Life Member
The Realty Alliance National Sales Award
C. Mike Messina Award for Leadership & Professionalism
Former Senior Vice President of Lyon Real Estate