If buying a home in Kansas City is on your list this year, you may be feeling frustrated. It’s possible you’ve put five or six offers on different homes and just aren’t the offer getting accepted. It might help to know what the seller is thinking, so check out our latest blog on how seller’s choose the right offer.
We also have, what we hope is, some encouragement for you. It’s not necessarily because of anything you’re doing or not doing. It’s just the hard facts of the low inventory market we’re in.
Sam Khater, Vice President and Chief Economist, Economic & Housing Research for Freddie Mac tells us:
“Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. In 2018, we estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, we estimate that the housing shortage increased to 3.8 million units by the end of 2020. A continued increase in a housing shortage is extremely unusual; typically in a recession, housing demand declines and supply rises, causing inventory to rise above the long-term trend.”
Okay, so maybe that was more discouraging to you to read that. Sorry! What we’re trying to get at is, you’re going to need some patience when working on buying a home in this market. Patience, and a really good real estate agent (shameless plug for Dani Beyer Real Estate). What you DON’T want, is a real estate agent who will be impatient. They have to be a rock for you and continue to guide you and work hard for you.
With that in mind, there are still a few things you can try to do to get your offer to stand out amongst multiple competitive offers. Here are some of our suggestions:
If you can swing it, an all-cash offer is going to look really attractive to a seller in this market. Especially if your cash offer comes with the waiving of an appraisal and inspection. We do understand if you’re bringing all cash to the table, an inspection might be important for you. So we’re not saying that it’s out of the question that they’d turn down your cash offer without an inspection waiver, but it will definitely make your offer more appealing.
If you’re not in a bind to get out of a lease or your own home, leaving the flexibility of a closing date up to the seller could be something that puts your offer over the edge. Some sellers will prioritize that over an offer price. So as long as financing allows it, if you’re able to move fast or slow, this could put your offer ahead of others.
Even just a few years ago, if a home was under multiple offers, you could go just $5,000 over asking price, and yours was the top offer. Not so much in 2021. Now, a full-price offer or one just a few thousand over the asking price is most likely the lowest offer coming to the table. On average (and dependent on the price of the home), we’re seeing anywhere between $15,000 – $30,000 over asking for a normal offer.
If you’re a buyer, this is something to consider when looking at the starting prices of homes in your budget. You may need to look at lower-priced homes, knowing you’re going to have to offer more than asking.
In addition, this is where an appraisal waiver could benefit you (if your loan allows for this). Because some of the homes would not necessarily appraise for the offer price. So if you require an appraisal, you may still need to put in that if the home only appraises for a certain amount, you’re willing to go a certain amount of dollars over that appraisal amount in order to ensure that your offer gets chosen.
The Right Agent
It’s really important to have the right agent on your side when buying a home in this seller’s market. Here are some things to keep in mind that you need from your agent during this stressful time:
- They need to be tuned in to what’s going on in the areas of town you’re looking at, along with all of the needs/wants on your list. You should be set up on an MLS portal so you’re getting notified as soon as something goes on the market.
- To go along with the last bullet, they need to get you a showing as soon as possible. And if it’s the house for you, your offer needs to get in as soon as possible.
- Connections will come in handy. If your agent has a good reputation and is well-connected with other agents in the area, they may have some insider knowledge to give you a leg up in the game.
- They need to be a strong negotiator and not afraid to tell you the truth. If you choose an offer, and they don’t think it’s competitive enough, they need to tell you! (And you need to not get your feelings hurt. They’re on your team!) They also don’t have to take no for an answer. If you get a rejection on an offer, just know, everything is negotiable (within your budget limits, obviously). You want an agent that is going to fight for you.
Write a Love Letter
Maybe not a love letter to the sellers, but a “we love this home so much we can’t not be chosen” letter. As we wrote about in our last blog, some sellers aren’t all about the money. Leaving their home that holds memories and sentimental value is really tough for them, and they want to know that whomever is moving in has goals to make it a family home or to make updates where the previous sellers just couldn’t make happen.
So just know, writing a letter isn’t a lost art! A seller could take notice when you take the time to tell them your story and your hopes and dreams for their new home. If you really want your offer to be considered, give a letter a whirl!
In summary, try not to get too discouraged! Again, it may not be anything you’re doing wrong with your offers. The fact is, there simply just aren’t enough homes available for the demand this year. However, if you’ve learned anything new in this blog, take it back to your realtor and make sure you’ve exhausted all options when it comes to your offers. And if you’re just getting ready to start the home buying process and are looking for a qualified agent, we’d love to represent you.
We have a strong team of buyer’s agents who know the city, the market and how to negotiate. We work hard for our clients, and we also make the stressful process fun (if you can believe it!). Need more convincing? Just take a look at our hundreds of reviews on Google, Zillow and Facebook!