Buying a House When Inventory is Low
It's been over 10 years since the 2008 real estate crash, but we're still feeling those effects today.
After the crash, it was harder to get a mortgage and first-time buyers were less willing (or able) to take on that kind of debt. Since fewer people were buying, homebuilders cut back on the number of homes they built so that they wouldn't have vacant properties sitting around.
Companies were afraid if they built too many new houses, there wouldn't be enough people to buy them, so they cut back on inventory.
Now there's much more demand for houses, but housing inventory hasn't been able to catch up.
That's great news if you're selling because it creates a seller's market. But if you're buying, it's nothing short of frustrating. Here's what you can do to find your dream home when the inventory is low.
Look at houses that have been on the market a long time
When you've been scouring through the listings Zillow (or another real estate site, if Zillow isn't your thing), it's tempting to only look at houses that are new to the market. After all, you've seen everything that's already out there, right?
If you're looking at a filtered view, that might not be exactly true.
Try taking off any price filters and start taking a look at houses that have been on the market a long time, but are just out of your price range. Chances are these listings are priced too high for the neighborhood, which is why they haven't sold yet.
Talk to your real estate agent to see if putting in a lower offer is a good option. If not, just be sure to keep an eye on the house. The sellers might start to lower the price and once it's in your range, be ready to pounce!
It can be hard to see a house for what it can be and not what it is. It can be even harder to understand what you have to do (and how much it will cost) to turn that diamond in the rough into a polished gem.
But if you can do it, you might just be able to get your dream home in your dream location. Before you get started, just make sure you understand what you're getting yourself into with a fixer upper!
Be patient, but proactive
With so few houses on the market you might find yourself getting desperate to put an offer on something, anything just so that you can say you have a house. Resist the urge and just be patient until the right house comes along (or until your circumstances don't allow you to wait).
That being said, you should be ready to go look at a house as soon as possible after it comes on the market. Make yourself available after work, during lunch, on the weekend, really whenever your Realtor says she can take you there.
Once you do find the right house, you might need to be flexible with a few things to make your offer more appealing. You could try to:
You saw the right opportunity and you had that house under contract three hours after it went on the market.
The only problem? The sellers aren't sure if they want to sign the contract because they don't think they can find a new place within 40 days.
If you have the flexibility offer them a rent back deal. You'll officially buy the house, but you'll allow the previous owners to stay put and rent from you for an agreed upon period.
Give on the closing date
So maybe renting back gives you a little bit of heartburn. No problem.
There are lots of ways you can still be flexible on the closing date, even if you're selling your current house. If you have to sell your house before you buy the new one you could consider a rental moving in with friends or family.
Ask for fewer repairs
Remember, the seller has other options. So, if you nitpick on repairs they might decide their better off saying no to everything and waiting for a better offer to come along.
If the repair is absolutely necessary, then go ahead and ask. But if it's something you can fix yourself, or hire someone for a reasonable amount, then don't ask for it.
Be ready to pay more
Ouch. Yeah, it hurts to hear you might need to up your budget.
But with houses going so quickly you might need to consider spending a little more in order to get what you're looking for.
Still not sure how you're going to find the right house? Check out our first-time buyer guide for tips.