Since the beginning of June 2020, the demand for homes in the United States has been unprecedented. The National Association of REALTORS® reported that sales jumped 20.7% month-over-month from May to June last year.
Despite the pandemic-related odds, 2020’s housing market continued on that positive trajectory. By the end of December, NAR reported that the market was up 22.2% year-over-year. The annual sales figure reached a peak of 6.477 million sales — the highest figure seen since 2006. This robust momentum did not stop when the new year began.
“Since mid-summer last year, the U.S. single-family housing market has been rebounding strongly. Instead of the typical winter lull, home sales and house prices continued to climb in the fourth quarter of last year and into the early months of 2021… We never really had a winter slowdown and clean break between the next spring homebuying season.”
Navigating the 2021 Sellers Market
As of April 2021:
- The median existing-home sales price in the U.S. is $341,600, 19.1% higher than the previous year.
- Listing inventories remain near all-time lows with 1.16 million units, 20.5% lower than last year.
- Properties are selling in an average of 17 days, 10 days less than last year’s rate of 27 days.
This combination of factors indicates a seller’s market. Under these circumstances, the competition between buyers is intensifying. In NAR's latest Confidence Index Report, REALTORS® reported that every home sold in April 2021 received an average of five offers.
As such, today's buyers should be prepared with strategies to help their offers stand out amid the competition. Here are five offer-improving tips to help buyers thrive in today’s seller’s market:
#1. Have a Strong Offer
In a seller’s market, your first offer needs to make a statement.
Catch the seller’s attention on your first impression by preparing a solid offer. An experienced real estate agent in your market will be able to pull comparable properties that have recently sold to help you determine the best offer price.
You should feel confident that your offer is your “highest and best” — balancing what you think the property is worth with the amount you’re willing (and qualified) to offer.
#2. Be Prepared with Earnest Money
Buyers put down earnest money with their offers to show a seller that they mean business. This money is held in an escrow account until closing. In some instances, if a buyer backs out of the deal, the seller keeps the earnest money as collateral.
Typically, the earnest money is between 1% and 3% of the listing’s purchasing price — but this can vary by market. Including this in your offer is a straightforward way to demonstrate your strength as a home buyer. A great real estate agent in your market will be able to tell you what’s customary.
#3. Include Your Mortgage Pre-approval Letter
Another way to stand out in a seller’s market is to submit your mortgage pre-approval letter with your offer. A pre-approval letter from your lender shows the seller that you’ve already started the financing process and that you’re pre-approved for the amount you’re offering. Of course, this looks favorable to a seller compared to buyers who haven’t started their financing.
Including your mortgage pre-approval letter in your offer will make a seller feel more confident about your home buying capacity.
#4. Consider an As-Is Offer
If it makes sense to accept the home as it is, making an as-is offer could be a strategic way to appeal to sellers. If you’re considering an as-is offer, always make sure that this is a wise purchasing decision by consulting with your real estate agent and home inspector. Buyers never want to take a home as it is just to land the deal, only to find out that it wasn’t the best choice down the line.
Always talk to your real estate agent about whether or not an as-is offer would be acceptable in your specific situation.
#5. Opt for a Quick Closing
Sometimes, a seller is working with a limited timeline. Offering a quick closing is a way to appeal to sellers interested in a short transaction process. Talk to your mortgage lender to see how much time they need to fund your loan, which will help you determine how quickly you could close on the house.
An experienced real estate agent will be able to help you navigate the timeline — ensuring that the home inspection, appraisal, and other to-dos are completed in time.
Finding a Top Real Estate Agent
Carry these action items with you as you navigate through today’s seller’s market. To foster a winning home buying experience, there is nothing more helpful than having a top agent at your side. Let us help you get connected with the very best real estate agent in your market today!