While the economy took a major hit because of the coronavirus pandemic, the real estate market has been booming lately. And as such, there is a great demand for housing, which is sparking bidding wars. This article will explain more about the increase in bidding wars among homebuyers across WA, ID, OR, and CO.
In This Article:
- What Does The Current State Of The Economy And Real Estate Market Mean For Homebuyers?
- What Can You Do To Stand Out As A Homebuyer With So Much Competition?
- How Can You Prepare For A Real Estate Bidding War?
- What Does All Of This Mean Moving Forward?
Over the past several months, in spite of the ongoing COVID-19 pandemic, there were more than a few signs that the economy was poised for a comeback. With the potential for everything to turn around, the market was hopeful that homebuyers would be house hunting once again.
Towards the end of the summer, the real estate market definitely seemed to be picking up steam as buyers began relieving their pent-up demand for a new home, and sellers finally started listing their properties after postponing their sales over the pandemic. However, buyers quickly learned that they might have to brace themselves for a lot of competition.
With summer and early fall being historically hot times for homebuyers all over the country, experts are pretty confident that buyers need to get ready for a bidding war.
Inventory Still Tight
There are not a lot of homes on the market right now, as sellers are still a bit reluctant to put their homes back on the market, especially since the economy still very much recovering. That said, the supply-demand dynamic has been an issue throughout the Pacific Northwest, with inventory being very tight across many housing centers. And with a limited or tight supply comes more competition among buyers who may be vying for the same properties.
The end result is that there is a disconnect between supply and demand. This imbalance is causing home prices to climb upward as homebuyers get into a bidding war. In light of these events, it is imperative for buyers to team up with a seasoned real estate agent and get pre-approved for a mortgage.
Homebuyers Might Be Surprised
Many homebuyers are surprised that prices are actually rising instead of falling. When the last recession hit, home prices actually fell significantly. This is because mortgage defaults were the cause of the last recession, which is why home prices fell so dramatically.
The cause of this economic downturn is different. Due to a limited supply of homes, there is more competition among homebuyers. More competition leads to handfuls of offers for a single home, and a bidding war.
In Seattle, the average home price has increased 10.61% over the past year, while in Boise, prices have skyrocketed 14.7% since the same time last year. These are just a couple of examples of how home prices are still on the rise, despite uncertainty going forward.
Be Prepared and Get Ready to Put Forth a More Competitive Offer
In order to find the right home, homebuyers need to place themselves in a position to compete against multiple offers from other homebuyers. And to do that, buyers should follow a few helpful tactics. Some of the most important tips to follow include:
- Hire a local real estate expert in Washington, Oregon, Idaho, or Colorado who understands the state of the market right now and can help you find the right home. Right now, the real estate market is not normal. It takes an expert to understand the ins and outs of buying a home in this market.
- Get pre-approved from the market to make sure the offer looks serious to the seller. Those who get pre-approved from a lender will demonstrate a strong desire to buy, pushing their offer to the top.
- Be realistic about your budget and what you can afford. Try to get your finances in order ahead of time. Doing so will help make the entire process easier.
- Make sure your credit profile is up to par. Having a healthy credit score and financial profile can help ensure that you are in a better position to get approved for a mortgage, which is a major step in the homebuying process.
- Save up for a large earnest deposit. The larger your earnest deposit, the more confident sellers may be in choosing you as the winning bidder. Plus, a larger deposit – which goes towards your down payment –this means you will have to take out less of a loan to finance the home purchase.
- Do not forget to keep an eye out for diamonds in the rough. Practically every community in high-demand has a few houses that do not necessarily put their best face forward. Yet, buyers searching for their dream home, even now, have a tendency to avoid homes that do not offer all of the latest bells and whistles or upgrades. Well, if you want to be competitive, then do not be that buyer.
- Come up with a bigger down payment. Much like an earnest deposit, a sizable down payment means a smaller loan amount is needed, which can go a long way at helping you get approved for a home loan to finalize a home purchase.
- Be flexible with closing dates. If the sellers want a certain closing date, try to be as flexible and accommodating as you can. The offer price and deposit amount may be important factors that sellers consider when evaluating offers, but the closing date also plays a key role.
- Lastly, try meeting the seller where they are at. This will provide you the opportunity to make your best offer and a more competitive one.
Ultimately, these are just a few ways to put forth a competitive offer and to prepare for the challenging real estate market ahead.
Ready to Apply For a Mortgage?
Do you have questions about home loans? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.