We all know the market is hot. Who hasn’t heard about houses selling for over the asking price, buyers waiving the chance to inspect a home. Lots of crazy things happening these day. People feel lucky just to get a house. Any house!
How can a buyer protect themselves these day?
Know the value of the house before you make an offer. The market is moving so fast right now that I don’t think many buyers or their realtors are looking at recent sales in the area to see what that hot new listing is worth. You can’t rely on the Zestimate. You can’t think that it must be worth it if it appraised. Appraisers are not buyers. The criteria they use to justify value is different that what a buyer uses. They don’t care about fancy finishes. They don’t appraise a view. To them it is all about numbers like square footage and room count. They have a 1-5 ranking for condition. Almost all houses you see are either a 3 or a 4. Buyers care about trendy finishes like how wide the planks are in the wood flooring, if the counter top is quartz or granite, what the tile in the shower is like. The tile in the shower could be carerra marble or green ceramic tile and the appraiser is going to value it the same.
Know the neighborhood. Let’s face it. When you buy a house, you are also buying the neighborhood. That means the part of town it is in, the amenities that are close, the school district, the parks, how close it is to a grocery store….all impact the value. Right now with such demand, there is not a lot of pricing difference between the most desirable neighborhood in any price range and the second most desirable neighborhood. There will be though in a cooler market. Picture this. There is a time in the future where houses stay on the market for more than a day. There are 3 houses for sale in the most desirable neighborhood and 3 for sale in the second most desirable neighborhood. There are 4 buyers. I think you know how this goes. There will need to be a pricing difference between both neighborhoods to make anybody pick the second most desirable neighborhood. That is how all markets work. If the store brand Mac & Cheese was the same price as the Kraft Mac & Cheese, nobody would buy the store brand with it’s grainy fake cheese and unattractive packaging.
Keep calm and think about your exit plan. You will one day want to sell the home you just fought so hard to purchase. Unless you are the luckiest person in the world, odds are you won’t have it as good as the seller did when you were the buyer. I cannot tell you how many people called me to sell their homes in the Great Recession who told me they paid full price in multiple offers for the house that nobody wanted when they needed to sell. If a house is totally average, has an average floor plan, has an average lot and is in an average neighborhood, don’t pay above average money for it. Personally, I think the only house I would yield to the will of the seller would be one that had something special that will also make it rise to the top of any buyer’s list in any market.
That is how you protect yourself in these crazy time.