The 2021 real estate market has created a lot of buzz. It has remained strong throughout the pandemic due to low interest rates. Now, we are seeing record-low inventory and many houses going under contract as soon as they are listed. Buyers are facing hard competition as sellers receive multiple offers on their properties. This has led to some misconceptions about buying and selling in the 2021 real estate market. Below are 5 common ones and the reality of each.
1. It’s better to get pre-approved after you find the perfect home to buy.
There isn’t one seller in the Wilmington real estate market who won’t ask for a pre-approval or proof of funds (if paying cash). Getting pre-approved doesn’t take a long time, but it does take time – time you can’t afford to spend when you find the right home. Lower-priced homes are receiving offers within hours of being listed. Higher-priced homes may take a little bit longer but are still receiving offers quickly (within 2-3 days). By the time you get your pre-approval, your favorite home could already be under contract.
It’s also important to know which price range you should be looking in. You may assume you will get approved for $300,000 only to find out after you’re pre-approval that you can only get a loan for $250,000 and below. It could also be the opposite. You may think you won’t be approved for $300,000 when you can actually go up to $350,000. $50,000 can make a big difference in both property availability and negotiations.
2. Always start with your lowest offer when buying a home.
This tactic may work in a buyer’s market when there are more homes than buyers, but this is a seller’s market and well-priced homes aren’t sticking around very long. Most properties are receiving multiple offers and not all sellers are giving the buyers a second chance to submit their “highest and best”. What you offer upfront may be the only offer you get to make. Make it a strong one.
3. It’s better to list your house on the high side when you’re selling.
One thing that has been made clear throughout this crazy market is that buyers still know when a home is overpriced and will steer clear of those properties. Pricing high can put you in a different price range than your target buyers. Right now, homes are negotiating up, not down, and buyers aren’t going into buying thinking homeowners will negotiate in their favor. That’s why many buyers are starting their searches in lower ranges and leaving room to negotiate.
Houses that are priced competitively with other similar homes are selling faster and attracting more offers. The sellers have positioned their homes in searches where the right buyers find them. Your Wilmington real estate agent can give you a good idea of what your home should be priced at. If you aren’t ready to list yet, consider trying an online valuation tool for a general idea of price.
4. Renovating your house will definitely net you more money when you sell.
Some renovations are necessary when you sell. You’ll get a higher price if all major systems are in good working order. You’ll also see a high return on investment if you paint the interior of the house a nice neutral color. Interior painting usually has a 107% return on investment. Any renovations beyond that can be avoided.
Inventory is so low right now, you can avoid doing major renovations. It’s a better approach to price the home competitively, taking into account the condition of the home, and allowing the new owners to make their own choices about materials, finishes, etc. After all, the tile, cabinets, light fixtures, and any other features you pick may not be their taste – and if it’s new, they may move on to another property while feeling less inclined to redo it all.
5. It’s safe to skip the home inspection if the house looks good.
We are seeing some buyers waiving inspections as a negotiation tactic. While this can be very appealing to a seller, because it means a lot fewer repairs, if any, that they have to deal with, it puts the buyer at risk. Unless you have contracting experience, have the financial backing to support the risk, and are ready to make major repairs to the property – please, please, please don’t skip the home inspection. A home is a major investment and the inspection could unveil issues that will cost you thousands of dollars down the road.
If you are looking for an advantage with the home inspection, assure the sellers that you won’t be wasting their time with any cosmetic repairs and are just concerned about being aware of anything that affects the major systems of the home.If you have any questions about buying or selling in today’s real estate market – perhaps something you have heard but aren’t sure is true – you are always welcome to send us a message or text/call us at (910) 233-2840. No question is a stupid question. We’ve all been there and are happy to help.
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