The first time I heard the expression, “think outside of the box,” was in a real estate seminar when I first moved to Florida. It’s a thought process that can be applied to almost anything in life, from romance to home renovations. But in the real estate market we’re currently in, it has a whole different meaning.
Buyers are in the most challenging real estate market in decades. The severe shortage of inventory is pushing sale prices so far up that many buyers ultimately get eliminated. Even buyers who are well qualified to purchase at higher prices are being outbid on multiple home offers. With the competition fierce, every buyer is looking for an edge, and some are very creative.
Not too many years ago, buyers who wanted to take that extra step in enhancing their offer would write a personal letter to the seller complimenting their lovely home and making their case for why this is the perfect fit for them and their family. Well, not anymore. Now, buyers are structuring clever ways to make their offers more appealing to sellers. Sometimes, this creativity is sparked by memorabilia around the home or other subtle indications of the sellers’ personalities. Buyers have used videos, a promise of donations to favorite charities and even offers with a numeric sequence that will appeal to the seller.
Is any of this worth a try? Maybe – appealing to individual egos and sentimentality can’t hurt. But it still all boils down to money, and no matter how you dress up your offer, unless it’s competitive in price and terms, chances are it won’t make a difference.
Speaking of money, our hot market is spurring a number of bidding wars all around the country. Ken Johnson, a real estate economist at Florida Atlantic University, warns getting caught up in a bidding war and buying at the top of the unusual market we are currently in could be a mistake, especially if your purchase is not a long-term investment.
However, most real estate professionals believe this seller’s market still has a long way to go, assuming interest rates stay down, which is predicted based on signs from the Federal Reserve. Most economists believe long-term shortages will continue, but even if inventory starts to go up as the virus stabilizes, there is still plenty of pent-up buying energy to sustain the market for a long time.
Nevertheless, trying to win in a bidding war takes a lot of due diligence to verify your over-asking offer is the right thing to do. Study up on recent sales and potential changes to the area and calculate how much work the home will need; it is easy to get taken over by the frenzy.
On the other hand, if you’re stepping back from improving your offer because you think the house may come back on the market, think again. There is not too much of that happening, especially since there is an abundance of cash offers. The Manatee County sales statistics for December showed an increase of 44.1% in cash offers for single-family homes from last year and 19.5% for condo sales. So, if your hope is that the property will not appraise for mortgaging purposes because there aren’t comparable properties available, you will probably be disappointed.
Real estate buying is all about finding the right balance. Do not be afraid to walk away if a particular property isn’t working for you. Sometimes you have to kiss a lot of frogs before one turns into a prince. Outside the box thinking has never been so important. Stay safe.
