Here’s how the herd mentality has affected our real estate market.
Summer is almost over, and it didn’t even feel like much of a summer due to COVID-19. However, the real estate market is the busiest I’ve seen in 30 years. Buyers are coming out in droves and paying over list price for homes (depending on the price point).
What’s going on? Economists can point to historically low mortgage rates and a low supply of homes coming onto the market as the main causes, but it’s more than that. In all my years of being in the real estate business and studying consumer behavior, the reason for all this activity is the same reason we saw a shortage of toilet paper after the pandemic first hit. Our need for toilet paper didn’t increase due to COVID-19, but we still saw shortages of it.
The same thing is happening with housing: When people found out that market activity was picking up and rates were down, a herd mentality took over. I witnessed online demand for housing increase exponentially because so many people were sitting at home and browsing real estate.
Whether you’re a buyer or seller, there are a lot of pitfalls to avoid during this time. If you’re a buyer, you can still get great deals, so don’t be discouraged from competing against other offers for the home you want. If you’ve ever played competitive sports, you know that you have to be in the game to win it. My team is getting offers accepted for our buyer clients that aren’t the highest-priced offers. Just the other day, one of our buyers beat out 15 others for a home without offering the highest price.
This brings me to one of the main pitfalls you need to avoid if you’re a seller: Accepting an offer that’s way above list price. One of my seller clients recently listed their home for $400,000, and the highest bid for it was $460,000. They were smart enough to know their home wouldn’t appraise for that amount, but that was the buyer’s strategy all along. They would knock all the other offers out of contention, wait for the appraisal to come in low—probably around $430,000—and get the home at that price.
My team and I can help you avoid these pitfalls no matter what your real estate goals are. Obviously it’s a great market for sellers, but it’s also a great market to buy in due to these super low interest rates. If you’d like to take the first step in achieving your real estate goals or have any questions at all, don’t hesitate to reach out to me. My team and I would love to help you.