Sheer Madness: 5 tips for Buying Real Estate in 2021
$160,000.00. That is a lot of money to most people. Life changing, even. In many areas of the country, that sum would afford you a suitable home outright. Last week, I submitted an offer for $160,000… over list price. And you know what? It didn’t really phase me. UM, WHAT!?
In the eye of the category 5 hurricane that is buying real estate in 2021, you’re left with two options: adjust to the chaos or get swept away. Either way, it feels like you are not in control as a buyer. So, what do you do? Great question.
Setting Expectations
I learned early in my real estate career to set expectations for my clients from the first conversation. We call it “Pre-frame vs. Re-frame”. The objective is to paint an accurate portrait of the market they are about to enter. After all, an informed buyer is an empowered buyer. So, what am I telling my buying clients in todays market? In the words of Samuel L. Jackson in the original Jurassic Park, “Hold on to your butts”. (Still can’t believe my dad let me see that in theaters at the age of 4).
It might sound like a cop out, but in a market that has seen a 52% decrease in inventory (homes for sale) and 800% increase in demand (buyers) over the past year, knowledge is all you got. Well, unless you have cash… cash works well, too. I could write 10 blogs on the ever-changing trends we are seeing in this market, but what is important is that I’m in the storm. I am there to see the changes in real time. And because of that, my clients are protected. You see, offer strategy has never been more complicated or crucial than it is today.
“How you win is developing a strategy with an agent who is in the storm EVERY.DAMN.DAY.”
This blog is not about the crazy market stats, it’s about how to win. And how you win is developing a strategy with an agent who is in the storm EVERY.DAMN.DAY. With talks of automation and tech encroaching on the role of Realtors everywhere, 2021 is a stark reminder that an experienced, well informed and skilled real estate professional is paramount to your success in home buying. You need someone who is going to tell it to you straight when you have unrealistic expectations. You need someone who will literally knock on doors in the neighborhood you want to be in to see if they want to sell (mailers/letters are a less invasive approach). Frankly, you need an agent who can bring a polished aggression to the table.
What Can You Do?
“Cool plug for realtors, Tom, but what can I do?” Here is a list of ways you can be prepared and ultimately successful in your home buying pursuit.
1. Elegant Bulldog: Hire a competent agent with a track record of success and develop an offer strategy (We probably have a trusted connection for you in your city, click here.)
2. Sit down with a lender and develop a clear understanding of your budget. Know what cash-to-close will look like at different price ranges, putting different amounts down, Cash to cover appraisal gap, etc.
3. Play the game. There is a good chance you’ll need to either be extremely patient or compromise on something to win an offer. If you want to win, you’ve got to be flexible. Play the game or it will play you.
4. Lower your price range. If you are approved for $500k, your price range should start at $400k. Why? Almost all attractive homes in decent areas will sell for above asking and, in many cases, well above. And you’ll probably need to cover appraisal gap (see video)
5. Wait. Yep, wait it out. No one can say what the next year or two will bring in real estate. And if you aren’t willing to be flexible or aren’t seeing what you need in your price range, sit it out. Save more money and keep your eye on what’s happening. I have had this conversion with many clients this year. Material costs should dip once production catches up, causing new build prices to come back down to earth. And if there’s a market crash (which I don’t see happening), you’ll look like a genius.
