Savvy home buyers know that winter is typically a good time to embark on a house hunt, since much of their competition stays holed up at home until spring. But this winter, buyers might notice that they've got company.
Lots of it, in fact.
"Normally winter is a good time for buyers," says realtor.com® chief economist Danielle Hale. However, since the coronavirus kept buyers on lockdown for much of spring, many are making up for lost time by home shopping hard right now.
"This year's unusual seasonal pattern means that buyers aren't getting the usual break from the market frenzy that they typically do in the cooler weather," Hale explains.
As a result, this winter is shaping up to be a seller's market, with low real estate inventory, high prices, and bidding wars that could give buyers a major run for their money.
This doesn't mean you should throw in the towel—just that you'll have to hone your house hunt in new ways to suit the times. Here are some tactics that will keep you ahead of the pack so you'll be sitting in a new home by spring.
Secure your financing as soon as possible
Getting pre-approved for a mortgage and securing financing are an essential first step when buying a home. It gives you a clear picture of how much house you can afford, and lets you make an offer as soon as you find your dream home.
Matt van Winkle, a real estate broker and owner at Re/Max Northwest Realtors in Seattle, says this process is more important now than ever.
“Getting pre-approved for a loan is obviously important, but is there anything else they can do to put themselves in a good position?” he says. “Buyers need to be ready to buy a house before they start looking.”
Too often, buyers don’t line up their financing until they find a home they want to buy, van Winkle says. In the current competitive market, waiting to get pre-approval means you could lose out on purchasing a home you love.
“That creates a mad dash and stress to get everything lined up under pressure,” he says. “Get all your financing secured and ready before you look, that way when you find the right home you're 100% ready.”
Starting early could also help you lock in an ultralow interest rate, which could affect your monthly mortgage payment and mean you could afford a more expensive home. (Record-low rates have been hovering below 3%, but are expected to tick upward again this year.)
Know what you want before you house hunt
COVID-19 has changed how we live and work. We’re spending much more time at home, and people are looking for different features in their living spaces.
Make a list of your must-haves before you start house shopping—and share your needs with your real estate agent.
Simon Isaacs, broker and owner of Simon Isaacs Real Estate in Palm Beach, FL, says it helps cut down on the number of homes you’ll have to view before finding the right one.
“I would suggest buyers not look at 25 homes,” he says. “If the agent is showing them that many houses, the agent doesn't know what they want.”
In such a competitive landscape, knowing exactly what you want enables you to act fast when you want to make an offer.
Tour homes virtually first
More real estate agents are embracing virtual tours and remote showings to ease coronavirus safety concerns. In some cases, they’re even limiting in-person showings to the most serious buyers—those with financing already secured, for example.
“Real estate agents in our local market are adjusting to the client's needs by continuing to provide in-person showings with precautions and also assisting buyers virtually with their home purchases,” says Matt Curtis, owner of Matt Curtis Real Estate in Huntsville, AL.
Virtual home tours, using Zoom or FaceTime, let you view the home from anywhere, and depending on the setup, you might be able to ask questions in real time. So you can narrow down the homes you’re most interested in and physically visit only the ones that best meet your needs.
Don't dawdle if you want to make an offer
In December, there were nearly 40% fewer homes on the market than during the same month last year, according to a realtor.com report. At the same time, buyer demand has increased, creating an incredibly competitive marketplace. Homes were on the market for an average of 66 days in December, 13 fewer days than last year.
Tracy Jones, a real estate agent with Re/Max Platinum Realty in Sarasota, FL, says the buyers she’s worked with lately have had just a few homes to consider. And, with all the other buyers in a location also looking at those same houses, you’ll need to act fast if you’re interested.
The challenge, she says, is potential buyers have little time to mull things over, and they are pitted against one another.
Isaacs is seeing a similar situation. Wait too long to submit an offer, and another buyer is likely to swoop in with an offer of their own.
“I would say don’t deliberate on buying,” he says. “I’ve had too many clients who were [saying], ‘Should we, shouldn’t we.’ I would say if it’s something that you want to do, do it.”
Make your offer stand out
Since inventory is so low, sellers are getting multiple offers on their homes these days. To make sure yours gets accepted, you’ll need to make it stand out.
A cash offer, if you can afford it, is attractive to sellers because it eliminates dealing with a mortgage lender and often speeds up closings. An inspection waiver comes with lots of risks, since you’re essentially agreeing to purchase a home as is, but the waiver removes any repair negotiations and helps you close faster.
For competitive markets, where you know you’ll be competing directly with many buyers, Jones suggests talking to your agent about escalation clauses. This is a contract addendum where you agree to pay more than other offers (up to a maximum you set).
Bottom line: “Find a strategy to help make your offer stand out amongst the 10, 20, or more offers that may come in on your dream home,” Curtis says.