Davidson Realty, Inc.

Q&A with Sherry: Buying strategies for a seller’s market

April 27, 2018

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Posted by in Ask Sherry, News, Northeast Florida Market Trends

Like much of the country, Northeast Florida’s home inventory has remained low and prices continue to inch upward. So, what does that mean for our real estate market? It means we are in the midst of a seller’s market, one that tends to be more competitive for buyers on the hunt for a new home.

However, there are a number of ways buyers can position themselves for a successful home search. I recently caught up with Davidson Realty President Sherry Davidson who provided some insights on our current market and how buyers can best prepare for buying in a seller’s market.

Northeast Florida inventory is down almost 12% and months’ supply is down 15+%. What do you see driving this trend?  We are seeing strong buyer demand. There are nearly 1,000 people a day moving to Florida. The economy is good and people are more confident. Also, millennials are the largest percentage of purchasers now as they begin to buy homes and start their families.

How do you think this trend will play out as we enter summer months? New construction is increasing but buyer demand is strongest in the spring and summer. I think we will continue seeing multiple offers and increasing prices.

Preparation is key for buyers shopping in a seller’s market. How can buyers best to be ready? They need to understand all the decisions that will need to be made to submit a contract on a home they like. This includes deciding where the down payment will come from, applying for pre- approval for a mortgage, positioning themselves to get out of a lease or have their existing home under contract, and considering the time frame to close.

What do you think gives buyers that extra edge when competing for fewer available homes? Having everything in order to convince a seller you are ready to buy their home is key. This includes proof of down payment and loan approval, no contingencies for selling an existing home, a more significant escrow deposit, and so on. It is important to be able to make an offer quickly when you find the right home because it will probably not be on the market without an offer for very long.

How can an agent help buyers overcome obstacles when competing with other buyers? One issue we are seeing is properties that appraise at a price lower than the purchase price, so sellers love a contract without an appraisal contingency. This is very difficult if the buyer doesn’t have additional funds to cover the extra down payment. That’s because the lender will not loan more than a percentage of the appraised price. Not having that contingency is a huge negotiating strategy.

Another strategy is using an escalation clause. It states that your offer will increase by a certain amount over all other offers up to a maximum amount you are willing to pay.

If you have any questions about buying or selling in Northeast Florida, reach out to one of Davidson’s experienced real estate professionals at (904) 940-5000.

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