How to Navigate a Hot Housing Market
Competition for homes in many cities is leading potential buyers to take steps they may not have considered a short time ago, including waiving the inspection. Lets take a look at how to navigate a hot housing market.
By Ann Carrns Published May 14, 2021Updated May 29, 2021
The home-buying market this spring is not for the faint of heart.
The main challenge is that the supply of homes for sale in most parts of the country continues to fall far short of demand. That is pushing up prices to heart-stopping levels in many markets. A lack of construction over the past decade, plus pent-up demand from pandemic shutdowns, has unleashed a national seller’s market. The median price for a single-family home rose about 18 percent in March to almost $335,000, a record high, according to the National Association of Realtors.
Daryl Fairweather, the chief economist for the Redfin online brokerage, said homes being listed for sale are selling quickly. About half sell in less than a week, usually after multiple offers.
The usual tips — like getting preapproved for a mortgage — apply more than ever. But competition in many cities is leading potential buyers to take steps they may not have considered even a few months ago, including offering tens of thousands of dollars above the asking price; agreeing to let the seller live, rent-free, in the house for several months after the closing; and waiving certain contingencies, like the right to inspect the house before buying.
Waiving inspections has long been common in competitive housing cities like Seattle, but it is becoming more frequent elsewhere, real estate professionals say.
Buyers will sometimes send personal notes to sellers to distinguish themselves from others vying for the same property, though some Realtors discourage the practice. Such “Dear Seller” letters include an introduction to the buyers and copious compliments about the house.
Mark Strüb, a real estate agent in Austin, Texas, sometimes invites buyers to write the letters, he said: “It never hurts.” He said he once had a seller with a strong sentimental attachment to the house pass over the highest offer because the potential buyer failed to write a letter, while the others vying for the home had all done so.
Dig deeper into the Hot Housing Market.
But agents often discourage sellers from reviewing such letters out of concern that the letters may reveal details about a buyer’s family status, race or religion that could inadvertently cause sellers to run afoul of fair-housing laws in their decision-making.
“It can actually backfire,” said Francine Viola, an agent in Olympia, Wash.
Buyers may note, for instance, that they look forward to gathering around the fireplace on Christmas, or that they find the home attractive because it is near a mosque. Should the seller be influenced by those details, the thinking goes, other buyers whose offers were rejected could potentially challenge the sale, claiming that they were victims of religious bias.
The Realtors association issued guidance last fall recommending that agents avoid using “love” letters. “Seemingly harmless,” the association said, “these letters actually raise fair-housing concerns.”