Competitive market compels home buyers to make quick decisions; some regret it later
By Ken Sturtz
Teri Beckwith fondly remembers the leisurely pace at which home buyers could shop for houses before the pandemic upended the real estate market.
“Years ago, you’d look at a house on a Saturday, you’d think about it for a week, you’d bring mom and dad back the next week, you’d think about it again, you’d have plenty of time,” says Beckwith, a realtor with Hunt Real Estate in Clay. “Now you’ve got to know in 24 hours; you’re making a quick decision.”
The real estate market has remained red hot for going on two years as low housing inventory has combined with soaring demand, sending house prices skyrocketing.
Jubilant sellers have frequently received numerous offers over asking price and real estate agents have struggled to keep up with the speedy turnover of properties coming into the market.
But it’s been a different story for potential buyers. Intense competition has made for a miserable, disheartening experience for many home buyers, who often have to put offers in on several houses before they actually get a deal.
And the competition means buyers need to move at breakneck speed when deciding whether to put an offer in on a house, which can lead to regrets later on.
A Zillow survey released in February points to many homeowners rethinking some of the choices they made in the middle of the pandemic real estate market, with three out of four recent buyers having at least one regret about their home.
About a third of respondents regretted buying a house that needed more work or maintenance than expected. Nearly a quarter wished they’d waived fewer contingencies such as financing, home inspection and sale of a previous home. And 38% wished they’d weighed their options more carefully.
The present situation is a stark contrast to the real estate market just five years ago when it was a strong buyer’s market.
Buyers had their pick of houses and could take their time, look at a bunch of properties and come back for a second or third showing, says Steve Case, owner of Acropolis Realty Group in Syracuse.
A buyer might look at a house and wait a month or more before putting in a lowball offer and trying to beat the seller up a bit on the price.
“It was not a fun time to sell a house five years ago,” Case says. “It’s totally flipped in the last five years.”
Now it’s the sellers who have leverage. A house that’s priced right and in a desirable location will usually fly off the market within days. As an example, Case says one of his agents had a house listed for sale recently that received more than 50 showings and 25 offers all in its first 24 hours on the market.
“There’s such limited inventory that the buyers are all competing to buy the same houses right now,” he says. “You can be a super strong offer, all cash, and still end up losing out on the deal.”
Mandy Saloski, an associate broker with Inquire Realty in Baldwinsville, has written more purchase offers for clients in the last two years than in the previous 15 years combined. She says she often writes offers with the knowledge that they most likely won’t be accepted.
And some would-be buyers never even get a chance to have their purchase offers considered.
Some sellers won’t even offer a deadline for submitting purchase offers. Saloski says she recently had a couple scheduled to look at a house only to find out that the seller had unexpectedly accepted one of the first offers they received.
“Somebody wrote an offer that the seller couldn’t refuse and the seller said ‘I’m stopping all showings, I’m going to take this offer,’” she says. “And it was probably more than likely a high cash offer with no home inspection.”
Buyers with government-backed loans such as through the FHA, VA and USDA have also struggled with getting sellers to consider their offers. Because of the requirements that can come with a government-backed loan, sellers are frequently choosing from the abundant offers with conventional loans or cash deals, Saloski says.
Competition is also pushing some buyers to resort to strategies such as waiving home inspections and radon tests to give themselves an advantage with sellers, who sometimes view contingencies as a hindrance.
Saloski says she tells clients they have a right to have a home inspection and radon test and that waiving them can be risky, but also advises that many buyers are prepared to forgo them. When she solicits feedback on offers that weren’t accepted the two most common reasons given recently are the type of loan or the desire for a home inspection and radon test, she says.
Despite the challenges in this market, brokers and real estate agents say most buyers are happy overall with their new homes. Beckwith, the agent with Hunt Real Estate, says a few buyers have expressed concern about their purchases, usually after getting into a bidding war and paying top dollar for a house.
“When the house isn’t exactly working for them they’re worried about being able to sell it,” she says. “They haven’t built any equity because they haven’t been there long enough.”
But with the housing inventory remaining low, she says that even buyers who’ve thought about selling are generally content to sit tight and let their house appreciate in value.
Brokers and agents say one of the best things buyers can do in the chaotic market is to rely on their realtor’s experience and knowledge to help them navigate the home-buying process. They can, for instance, ensure buyers are informed before they decide to put in an offer over asking price or waive contingencies. And they can help steer buyers in the right direction, making sure they don’t get swept up in the fervor of the market, Case says.
“You still want to make sure it’s the right home for you,” he says. “At the end of the day you’re not just buying something to buy something. This is going to be your home.”
Featured image: From left Teri Beckwith, Mandy Saloski, Steve Case