6 Trends & Tactics We’re Seeing Among Buyers
This is what buyers are doing to compete for homes in our market.
Here are six trends and tactics we’re seeing among homebuyers in our current market:
1. Almost everything is selling over list price. If you plan on buying a home soon, wrap your head around the fact that you’ll likely have to be super aggressive and make offers over list price. If you’re going over list price, what does that mean as far as the appraisal goes? The home likely won’t appraise for that huge number, and that fact leads us to our next point…
2. Buyers are either waiving the appraisal or agreeing to pay the appraisal delta. By ‘delta’ we mean the halfway point between what they offered and what the home appraised for. They’re paying the difference in cash, and that can be a big number considering they already have to pay their down payment amount and cover the closing costs. We’re seeing this happen more now than at any time in the past 15 years.
3. Buyers are agreeing to pay the sellers’ transfer taxes. Everybody knows what it means to get closing help from sellers, but this is the reverse of that. In a normal transaction, the buyer and seller split the transfer taxes, but now buyers are willing to pay the seller’s half to save them money at closing. This is a strategic way to improve your offer because it increases the seller’s net gain without affecting the sale price and appraisal.
4. Homes are being sold as is with inspections and the right to terminate or sometimes without any inspections. This is a calculated (albeit super risky) move by buyers, but some are comfortable with the upgrades and improvements the sellers have done as long as they can provide documentation and warranties supporting them.
"There is no ‘right’ or ‘wrong’ when it comes to
these trends and tactics."
5. Free rent-backs are more common. When sellers can’t move right away after selling, buyers are often letting them stay in their previous homes after settlement without charging them. Normally they’d lease the property back to them for however long they need, but now they’re letting them stay for free.
6. Buyers are offering to pay their own agent’s commission. In our market, most sellers pay one flat fee for their commission, and their agent pays the buyer’s agent. Some buyers are willing to pay their own agent and waive this fee on behalf of the seller to save them money. Again, this doesn’t affect the appraisal value of the home, which is always something people are uncomfortable with in these situations.
What does all this mean? It’s important to realize that there is no ‘right’ or ‘wrong’ when it comes to these trends and tactics. They sound scary, and they’re certainly unprecedented, but being a buyer in this market depends on your risk tolerance, how much you love the house you want, and/or how dire your moving situation is. You have to decide how comfortable you are with these strategies.
Also, whether or not you’re willing to make an offer over appraised value should depend somewhat on how long you plan on staying in the house. If you only plan on staying there for three to five years, you’re probably not recouping that extra cash. If you plan on staying for a decade or longer, by all means, be aggressive with your offer.
Each home purchase is different, so if you have questions about how this topic pertains to you or there’s anything else we can help you with, feel free to reach out to us. We look forward to hearing from you.