Traditionally, spring rings in the start of a new home buying season, and not just in Michigan. However, like with many things, the 2021 pandemic has changed that.
Open houses and in-person viewing have become a thing of the past. Viewings have been conducted by Zoom, and the thought of finger-food platters and a crowded open house would have many buyers running for the hills.
The pandemic has also created other challenges that are making things more difficult for buyers. Learn some home buying tips that every Michigander should know as a buyer to up your 2021 game at the negotiating table.
Is Michigan A Buyers Or Sellers Market In 2021?
We are currently in an ultra-competitive seller’s market in Michigan and across the country. As a result, homes are selling fast, with the average time on the market being 32 days shorter than at the time last year.
Despite the pandemic and economic downturn of this year, homes are selling fast in most places across the US, giving sellers the upper hand at the negotiating table. Based on the current trends, we can expect things to stay that way for the foreseeable future.
Buying A House In 2021’s Sellers Market
We may be in a seller’s market, but that doesn’t mean there aren’t steps you can take to put some of the power back in your course. It’s still possible to purchase the home of your dreams. However, the process may be a little different than you were expecting.
Looking Further Afield
It may be tough to purchase a home in a dream neighborhood such as Grand Rapids, Ann Arbor, Kalamazoo, or Lansing, MI in the current market. With houses selling fast, the homes in the hottest areas are never on the market for long.
Now could be the time to expand your search. Looking away from the most popular neighborhoods will give you a greater selection of homes to look at. As you look further afield, you may also find that you will be able to get a property with more square footage and better amenities for your budget.
Get to It Before It’s Listed
When searching for your dream house, you should consider properties that aren’t even listed yet. To get a jump on the competition, people are now working with Realtors that are previewing the inventory before they list it on the MLS. By beating other potential bidders to the punch, you get the first, and fair shot at the house. The seller benefits from the deal because they save on commission. The Realtor cuts down on leg work, and so everyone wins.
To get a leg up on the competition (and bidding), you should get pre-approved for a mortgage before you start searching for a house. It’s a surefire way to help you get the house you want in a rabid market.
A mortgage pre-approval lets a seller know that you have spoken to a mortgage lender and the lender thinks you have good odds of being approved for a mortgage.
It’s more attractive for a seller to sell to a buyer with pre-approval because they know for certain that the buyer will be able to follow through on their offer. It reduces risk and time to close – advantages for both buyers and sellers.
Negotiating A House Price In 2021’s Sellers Market
Knowing that you are entering a seller’s market means you will have to approach price negotiations differently. You’re not likely to get cut prices for homes, even if they need major repairs. It is crucial to go into price negotiation with a strategy to ensure you land the home you have been dreaming of.
Expect to Pay Over The Asking Price
There is no point going into negotiations with a lowball offer. Sellers know they will be able to get their asking price, if not more, because of the current state of the market. Many will not even consider a lower offer, giving you an immediate rejection. They may even be irritated that you wasted their time.
An excellent tactic to approach buying a home in a seller’s market is to look for homes under your budget, which means you can bid over the asking price. If you end up in a bidding war for a home at the top end of your budget, you will quickly reach your limit and be disappointed when another buyer offers higher than what you can pay.
Bidding wars and trumped-up home prices, don’t mean the house will appraise at the price that’s been artificially inflated by demand. Sure, other home sales do factor into the appraisal value, but that may not be enough to boost your potential home’s value. When the sale price of a house doesn’t match the appraised value, the bank won’t mortgage the full price. That leaves the buyer to come up with the difference. Or, worse yet, you may not get the loan at all.
You should consider whether or not you can cover any differences between the sale price and the appraisal before getting into a bidding war.
It’s Not All About Price
Sellers will sometimes be willing to sell to you rather than wait for a higher offer or go with another buyer because you can offer them the convenience they need.
For example, if you don’t have to sell your house before purchasing another, sellers will often see this as an advantage because you will be able to close quicker than another buyer waiting on a chain of house sales.
Another advantage is being able to make a cash offer. Not having to rely on a lender also speeds up the time to close and can be attractive to sellers looking to quickly move into their next property.
Buying A New Home Means You’ll Need A New Home Insurance Policy
Buying a new home can be stressful. A seller’s market makes it even more so. You may end up searching for longer than you were hoping. Or have homes sell out from under you as other buyers make faster or higher offers. But hope is not lost. Following the tactics above should help you land your dream home, even in a seller’s market.
When you move into a new home, you have a lot to think about, from real estate agents to lawyers and lenders, and even insurance carriers. Don’t forget that you must have a home insurance policy to cover your new property for most leaders.
To make sure you are getting the best rate with the best coverage that fits your needs and an idea of what home insurance will cost you before closing, get a quote today from Compass Insurance Agency located in Grand Rapids, Michigan! We will do all the legwork for you by getting about 20 insurance providers to compete for your business and present you with the best options while explaining everything clearly.