The current real estate market is considered by some to be the most competitive in history. With far more buyers than sellers, this is leading to a frustrating experience for many. As an example, our brokerage just listed a nice lakefront home in Boca Raton, FL this week. In addition to getting under contract within a day, it is selling for above asking price with an all cash offer and no inspection period! Needless to say, an offer like this makes it considerably difficult to compete against for other prospective buyers. In some areas of the country, more than half of all offers enter into a bidding war. In this article, we will discuss some tactics that buyers may want to consider in the current ultra-competitive real estate market.
Home buying tactics to consider
- Multi-family instead of single-family: With the increased demand for more space and social distancing, the single-family market has been on fire. With this said, buyers may want to consider a multi-family unit such as a condo or townhouse. Although this market is also competitive, it is not quite as competitive as the single-family home market.
- Make contingencies more appealing: Waiving certain contingencies such as an inspection or appraisal is not always feasible and may also add risk to buyers. With this said, one approach to make an offer more appealing to sellers is to shorten contingency timelines.
- Sign a low appraisal addendum: Oftentimes an appraisal contingency is not able to be waived. However, a buyer can present a low appraisal addendum to make an offer more appealing to the seller. For example, if a buyer submits a $400,000 offer but the appraisal comes in at $375,000, the buyer would agree to pay the $25,000 difference. Needless to say, the addendum would reflect an amount that they buyer is comfortable with paying the difference on.
- Consider submitting sight-unseen offers: Almost two-thirds (63%) of people who bought a home in 2020 made an offer on a property that they had not seen in person. This is the highest share since at least 2015 and up from 32% in 2019, according to a recent survey commissioned in November and December. We have seen instances where buyers missed out on a property before showings were even allowed because the seller accepted an offer sight-unseen. Although it can be nerve-wracking to submit an offer sight-unseen, buyers typically have the inspection period to make the ultimate decision on whether or not to move forward with the purchase.
- Offer to pay some of the seller’s closing costs: To make an offer more appealing, buyers can offer to pay for expenses typically covered at least partially by the seller.
We expect the South Florida real estate market to remain quite competitive for the foreseeable future, particularly given the amount of Americans moving to this area. With this said, it is imperative that buyers have a thorough plan in place when entering this market. In addition, it is critical to have a team that is responsive and communicative. This is where a professional and knowledgeable real estate agent along with a mortgage broker and real estate attorney can be extremely valuable. Implementing some or all of the tactics discussed above may give buyers the best chance at having their offers accepted.
If you are looking to buy a property in South Florida, we can help. Live South Florida Realty, Inc. has been a trusted name in the South Florida real estate for many years. Contact us today! You will be glad that you did.