April 2018 Data and Tips on Buying in a Seller’s Market

Monthly Market Update:  Housing Statistics for Dane County for April 2018

Demand for housing continues to be strong while inventory continues to be tight.  Dane County sales through April 2018 trailed 2017 slighted, due possibly to the paucity of listings, but the rest of south central Wisconsin outpaced the April 2017 sales.  Nevertheless, Dane County is still ahead of 2017 for the first four months of sales at 2007 (for 2018) versus 1954 (for 2017) and the median price rose to $275,000 ($265,000 in 2017).  We ended the month with a slight rise in inventory and with gently rising interest rates there is a chance that trend will continue.  However, confidence in the economy and that this is a good time to buy and to sell continues.

Summary of the data for the month of April 2018:

  • Number of sales of single family homes: 655 (676 in 2017)
  • Number of new listings: 971 (980 in 2017)
  • Total listings available end of April: 961 (1070 in 2017)
  • Number of months inventory available: 42 mos. (1.61 in 2017)
  • Interest rates up to approximately 4.55% (4.05% in 2017)
  • Median price of single family homes and condos: $275,000 ($265,000 in April 2017)

 

Eight Tips on Buying in a Seller’s Market :

Although there has been a lot of coverage on the tight real estate market and stories are circulating about multiple offers on properties, buyers should not become unduly alarmed or despondent.  There are many strategies that you can employ to win out over your competition.  First of all, don’t just assume you have competition; there are still houses which won’t draw multiple offers.  When you do find yourself in competition, consider the following:

  1. Price: The most obvious way for buyers to compete is on price.  With homes in the $200,000 price range we have been seeing prices go over by as much as $10,000-$15,000 with some regularity, and in many instances even higher.  It is still important to know the comparable sales so you know if you are over-spending.
  2. Earnest money: Earnest money is typically about 1% of the offer.  By raising the earnest money you can show the seller that you are a serious, reliable, and well-qualified buyer and the seller will have this potential hedge against the risk that you will walk away from the deal.
  3. Closing date: Your agent should be in communication with the listing agent to find out what closing date the seller would like.  Offering the seller their preferred date, flexible dates, or the option of post-closing occupancy to accommodate the seller’s needs can help tip the scales.
  4. Financing contingency: Show the seller you are very likely to get the loan by raising the down payment you plan to make from 5% down to 10%, 15% or even 20% down payment, shortening the contingency deadline, bumping up the maximum interest rate, and providing a pre-approval letter which shows you can afford the price you are offering
  5. Appraisal contingency: Especially with offers above the asking price, there is always the risk of an appraisal coming in low.  You may consider offering some protection to the seller by limiting your options for voiding the contract if the appraisal is below the offer price.
  6. Inspection contingency: Sellers are often concerned about issues arising during inspection that will scuttle the deal.  In addition to giving the seller the right to cure defects in the offer, a buyer may also put in specific dollar amount thresholds for being able to object to defects.  It is always risky to make an offer with no inspection contingency, but in rare cases a buyer may even feel confident enough to take this risk in order to gain a competitive advantage.
  7. Other miscellaneous contingencies: Every contingency in an offer is another hurdle the seller would rather not have to clear.  There are several that a buyer may choose to leave out in order to sway the seller, provided the buyer understands the risks.  Some examples include: radon testing, mold testing, home warranties, closing cost credits, subdivision covenants, surveys, etc.
  8. Personal letter to the seller: Never underestimate the power of a personal letter from the buyer to the seller talking about the reasons you love the house and neighborhood.  The seller wants to know the new buyer will love the house as much as they did.

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