Spring housing market: With the lowest inventory in 11 years, homebuyers may end up in multiple offer situations
The major factor in the spring 2014 real estate market is the fact that the inventory of homes for sale is the lowest it’s been in 11 years.
Because the demand for homes far outstrips the supply, the spring real estate market is clearly a seller’s market. Potential homebuyers in this market may well end up in a multiple offer situation, according to Barb Jandric, president of Edina Realty, who had several key pieces of advice.
“Chances are you will have to make an offer more quickly than anticipated and things can move very rapidly in a multiple offer situation,” Jandric said. “So the most important thing to do is to be prepared.
Buyers may help themselves by being pre-approved with a lender. Jandric said potential buyers may want to pull together as much cash as possible for earnest money to demonstrate to sellers that they’re serious.
If there are already multiple offers on the table, there’s only one opportunity to make your offer, so it must be your best, Jandric said.
“At all costs, avoid making an offer with any contingencies, with the exception of making it contingent upon a home inspection,” she said. “If the home doesn’t have any major issues such as a cracked foundation or a leaky roof, which a home inspection should uncover, a ‘clean’ offer with no contingencies is usually more attractive than the highest offer with contingencies.
Jandric said offering a quick closing date or more earnest money may help motivate a seller to accept an offer.
“Most sellers simply want to sell quickly, don’t want to have to make expensive repairs and want to feel confident that the sale will go through without a hitch,” Jandric said. “If you really love the home, you could even write a letter to the sellers letting them know why you love their home and how you’ll care for it. The emotional appeal and connection could well win the sellers over. It’s certainly worth a shot.”
Once an offer is presented, Jandric said buyers should be readily accessible to respond to any counter offers quickly. Jandric said real estate agents can offer expert advice throughout the entire home buying process, from negotiating with the seller’s agent on price and other factors, to helping buyers with their financing options, including accessing any down payment assistance programs.
Jandric’s final advice was directed at potential sellers in this unusual market.
“If you’ve been waiting to sell, the time is now,” she said. “The market clearly needs more inventory to keep up with the demand. Homes that are coming on the market are selling quickly and getting very close to their asking price, and buyers are still benefiting from historically low interest rates so they are making their move now.”
According to the Minneapolis Area Association of Realtors, the average sale price of a home in the Twin Cities area is up 12.6 percent over the same period last year. The average time on the market is down 27.7 percent; homes are selling in 82 days on the average, and are getting 96.1 percent of their asking price.
Even some homeowners who were ‘underwater’ or who didn’t have much equity in their homes may find that their home value is such that they can make their move, Edina Realty reported.