With a limited number of homes for sale today and so many buyers looking to make a purchase before mortgage rates rise further, bidding wars are common. According to the latest report from the National Association of Realtors (NAR), nationwide, homes are getting an average of 4.8 offers per sale. Here’s a look at how that breaks down state-by-state (see map below):

The same report from NAR shows the average buyer made two offers before getting their third offer accepted. In this type of competitive housing market, it’s important to know what levers you can pull to help you beat the competition. While a real estate professional is your ultimate guide to presenting a strong offer, here are a few things you could consider.

Offering over Asking Price

When you think of sweetening the deal for sellers, the first thought you likely have is around the price of the home. In today’s housing market, it’s true more homes are selling for over asking price because there are more buyers than there are homes for sale. You just want to make sure your offer is still within your budget and realistic for the market value in your area – that’s where a local real estate professional can help you through the process. Bankrate says:

“Simply put, being willing to pay more money than other buyers is one of the best ways to get your offer accepted. You may not have to increase it by a lot — it’ll depend on the area and other factors — so look to your real estate agent for guidance.”

Putting Down a Bigger Earnest Money Deposit

You could also consider putting down a larger deposit up front. An earnest money deposit is a check you write to go along with your offer. If your offer is accepted, this deposit is credited toward your home purchase. NerdWallet explains how it works:

“A typical earnest money deposit is 1% to 2% of the home’s purchase price, but the amount varies by location. A higher earnest money deposit may catch a seller’s attention in a hot housing market.”

That’s because it shows the seller you’re seriously interested in their house and have already set aside money that you’re ready to put toward the purchase. Talk to a professional to see if this is something you can do in your area. 

Making a Higher Down Payment 

Another option is increasing how much of a down payment you’re going to make. The benefit of a higher down payment is you won’t have to finance as much. This helps the seller feel like there’s less risk of the deal or the financing falling through. And if other buyers put less down, it could be what helps your offer stand out from the crowd.

Non-Financial Options To Make a Strong Offer

Realtor.com points out that while increasing these financial portions of the deal can help, they’re not your only options:

“. . . Price is not the only factor sellers weigh when they look at offers. The buyer’s terms and contingencies are also taken into account, as well as pre-approval letters, appraisal requirements, and the closing time the buyer is asking for.”

When it’s time to make an offer, partner with a trusted professional. They have insight into what sellers are looking for in your local market and can give you expert advice on what levers you may or may not want to pull when it’s time to write an offer.

From a non-financial perspective, this can include things like flexible move-in dates or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). For example, you could make an offer that’s not contingent on the sale of your current home. Just remember, there are certain contingencies you don’t want to forego, like your home inspection. Ultimately, the options you have can vary state-to-state, so it’s best to lean on an expert real estate professional for guidance.

Bottom Line

In today’s hot housing market, you need a partner who can serve as your guide, especially when it comes to making a strong offer. Let’s connect so you have a trusted resource and coach on how to make the strongest offer possible for your specific situation.

Some Highlights

• If you’re thinking about selling your house this season, focusing on a few quick and easy updates outside can help your home look its best.
• 78% of real estate agents polled say poor landscaping affects property values. As a seller, that means your yard could impact your bottom line.
• When getting your house ready to sell, let’s connect to discuss what you should do to make sure your house shows well and catches the eyes of more potential buyers.

If you’re in the market to buy a home this season, stick with it. Homebuyers face challenges in any market, and today’s is no exception. But if you persevere, your decision to purchase a home will be worth the effort in the end. In fact, a recent survey from Bankrate shows homeownership is so powerful that:

“Nearly three in four homeowners say they would still buy their current home if they had it to do [sic] all over again.”

That means the results – owning a home and the benefits that come with it – outweigh the effort needed to achieve their goal. If you’re a homebuyer, let that provide you with the confidence to know the work you’re putting in today will pay off for years to come. Here are a few reasons to stick with your search and focus on the outcome.

Homeownership Contributes Significantly to Your Financial Well-Being

The National Association of Realtors (NAR) lists several motivations to consider if you’re thinking about buying a home. One of the top financial reasons is the equity you build. As NAR says:

“Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity . . . Building equity in your home is a ready-made savings plan.”

Your equity is a powerful tool you can leverage in a number of ways. And with recent home price appreciation, homeowners are seeing record levels of equity today. That may be one reason why so many people view owning a home as a great investment and a top indicator of financial well-being. As the survey from Bankrate mentioned above shows:

“. . . Americans place a higher value on homeownership than on any other indicator of economic stability, . . .”

Owning a home ranks above other major accomplishments like retirement, having a successful career, and getting a college degree. That indicates just how impactful the financial benefits of homeownership truly are.

The Emotional Benefits of Owning a Home Are Powerful

Of course, homeownership is more than an investment. In their list of top reasons to buy a home, NAR also highlights some of the powerful, non-financial aspects of homeownership. Among them is the opportunity to customize your home to reflect your personality and needs. As they say:

“The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.”

Another benefit homeowners enjoy is the stability it provides. Homeowners typically stay put longer than renters. According to NAR, when you remain in one place longer than a few years, you can grow closer to your community. And that can enhance your sense of pride and lead to better relationships.

What Does That Mean for You?

The benefits of homeownership are powerful, as Leslie Rouda Smith, President of NAR, says:

“From building personal wealth and fostering communities, to strengthening social stability and driving the national economy, the value of homeownership is indisputable.”

Even if you face challenges in today’s market, the payoff when you succeed and purchase a home will be worth it.

Bottom Line

If you’re planning to buy a home this year, there are incredible benefits waiting for you at the end of your journey. Let’s connect to discuss everything homeownership has to offer.

If you’re planning to buy a home this season, you’re probably thinking about what you’ll need to do to get your offer accepted. In previous years, it was common for buyers to try and determine how much less than the asking price they could offer to still get the home. The buyer and seller would then negotiate and typically agree on a revised price that was somewhere between the buyer’s bid and the home’s initial asking price.

In today’s real estate market, buyers shouldn’t shop for a home with the same expectations.

Things Are Different Today

Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), the average home that’s sold today:

• Receives 4.8 offers
• Sells in just 17 days

Homes selling quickly and receiving multiple offers shows how competitive the housing market is for buyers right now. This is because there are more buyers on the market than homes for sale. When the number of homes available can’t keep up with demand, homes often sell for more than the asking price.

How Does This Impact You When It’s Time To Submit an Offer?

Market conditions should help guide your decisions throughout the process. Today, the asking price of a home is often the floor of the negotiation rather than the ceiling. Knowing this is important when it’s time to submit an offer, but you should also use that information as you’re searching for homes too. After all, you don’t want to fall in love with a home that ultimately sells for a price higher than what you’ve budgeted for.

The Mortgage Reports has advice if you’re looking to purchase a home in a competitive market. The article encourages you to be realistic with your housing search, saying:

“The best thing to do is set your budget and expectations ahead of time so you know how much you can afford to offer — and when to walk away. This will make negotiations a lot easier.”

Of course, when you’ve found your dream home, you’ll want to do everything you can to submit your best offer up front and win a potential bidding war. Knowing the current market is key to crafting a winning offer. That’s where working with an expert real estate advisor becomes critical.

A real estate professional will draw from their experience and expert-level knowledge of today’s housing market throughout the process. They’ll also balance conditions in your area to make sure your offer stands out above the rest.

Bottom Line

Understanding how to approach the asking price of a home and what’s happening in today’s real estate market are critical for buyers. Let’s connect so we can work together to create a winning plan for you.

If you’re thinking of selling your house, it may be because you’ve heard prices are rising, listings are going fast, and sellers are getting multiple offers on their homes. But why are conditions so good for sellers today? And what can you expect when you move? To help answer both of those questions, let’s turn to the data.

Today, there are far more buyers looking for homes than sellers listing their houses. Here are the maps of the latest buyer and seller traffic from the National Association of Realtors (NAR) to help paint the picture of what this looks like:

Notice how much darker the blues are on the left. This shows buyer traffic is strong today. In contrast, the much lighter blues on the right indicate weak or very weak seller traffic. In a nutshell, the demand for homes is significantly greater than what’s available to purchase.

What That Means for You

You have an incredible advantage when you sell your house under these conditions. Since buyer demand is so high at a time when seller traffic is so low, there’s a good chance buyers will be competing for your house.

According to NAR, in February, the average home sold got 4.8 offers. When buyers have to compete with one another like this, they’ll do everything they can to make their offer stand out. This could play to your favor and mean you’ll see things like waived contingencies, offers over asking price, earnest money deposits, and more. Selling when demand is high and supply is low sets you up for a big win.

If you’re also looking to buy a house, you may be tempted to focus more on just the seller traffic map and wonder if it means you’ll have trouble finding your next home. But remember this: perspective is key. As Danielle Hale, Chief Economist at realtor.com, says:

“The limited number of homes for sale is a lesson in perspective. This same stat that frustrates would-be homebuyers also means that today’s home sellers enjoy more limited competition than last year’s home sellers.”

If you look at the big picture, the opportunity you have as a seller today is unprecedented. Last year was a hot sellers’ market. This year, inventory is even lower, and that means an even bigger opportunity for you. Even though finding your next home in a market with low inventory can be challenging, is that concern worth passing on some of the best conditions sellers have ever seen?

As added peace of mind, remember real estate professionals have been juggling this imbalance of supply and demand for nearly two years, and they know how to help both buyers and sellers find success when they move. A skilled agent can help you capitalize on the great opportunity you have as a seller today and guide you through the buying process until you find the perfect place to call your next home.

Bottom Line

If you’re ready to move, you have an incredible opportunity in front of you today. Trust the experts. Let’s connect so you have expertise on your side that can help you win when you sell and when you buy.

There’s never been a truer statement regarding forecasting mortgage rates than the one offered last year by Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is: Don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

Coming into this year, most experts projected mortgage rates would gradually increase and end 2022 in the high three-percent range. It’s only April, and rates have already blown past those numbers. Freddie Mac announced last week that the 30-year fixed-rate mortgage is already at 4.72%.

Danielle Hale, Chief Economist at realtor.com, tweeted on March 31:

“Continuing on the recent trajectory, would have mortgage rates hitting 5% within a matter of weeks. . . .”

Just five days later, on April 5, the Mortgage News Daily quoted a rate of 5.02%.

No one knows how swiftly mortgage rates will rise moving forward. However, at least to this point, they haven’t significantly impacted purchaser demand. Ali Wolf, Chief Economist at Zonda, explains:

“Mortgage rates jumped much quicker and much higher than even the most aggressive forecasts called for at the end of last year, and yet housing demand appears to be holding steady.”

Through February, home prices, the number of showings, and the number of homes receiving multiple offers all saw a substantial increase. However, much of the spike in mortgage rates occurred in March. We will not know the true impact of the increase in mortgage rates until the March housing numbers become available in early May.

Rick Sharga, EVP of Market Intelligence at ATTOM Data, recently put rising rates into context:

“Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.”

While no one knows exactly where rates are headed, experts do think they’ll continue to rise in the months ahead. In the meantime, if you’re looking to buy a home, know that rising rates do have an impact. As rates rise, it’ll cost you more when you purchase a house. If you’re ready to buy, it may make sense to do so sooner rather than later.

Bottom Line

Mark Fleming got it right. Forecasting mortgage rates is an impossible task. However, it’s probably safe to assume the days of attaining a 3% mortgage rate are over. The question is whether that will soon be true for 4% rates as well.