With the amount of foreclosures and short sales inventory dwindling along with fewer private home sellers placing their home up for sale, this market has gone from a buyers market to a seller’s market. The market hit bottom in 2011 and now with low-interest rates along with our local economy recovering, consumer confidence has been getting stronger and this has help make the demand for homes in the Metro Detroit real estate market increase. The market values have been on a rapid increase in many community across the area. The Metro Detroit Real Estate market has been cited by many experts as being one of the top hottest real estate markets in the country and projecting values to increase as much as 30% over the next few years. Many home buyers that are coming in to this market are in for a rude awakening if they think that they can still “steal” a property or “low ball” a home seller. Here are five MUST KNOW’s that home buyers needs to be aware of to be the most educated consumer possible.
- Run, Don’t Walk– The homes that are priced competitively and are in average to better than average condition are selling within hours of hitting the market. Don’t wait till the weekend to see that new home that comes on the market during the week. You will have to be prepared to see that new home on the market that first day it becomes available if you want to have an opportunity to make an offer.
- Give yourself plenty of time for the process – With the low amount of inventory, it may take you longer to find that right home. If you lease is coming up, see if a month to month option is available or if your selling your home, make sure you have enough occupancy time one you close your home sale.
- Be prepared to get in to a bidding war – I have sold almost 38 homes this year and over 90% of these homes had multiple offers presented on them. Make sure your offer has the fewest amount of contingencies possible so you can make your offer look as good as possible. More often than not, it will take an offer above the list price for you to get your offer accepted.
- Have spare funds available if the home does not appraise for sales price – This is one of the hardest concepts for buyers to get a hold of. The national appraisal guidelines have not caught up to our local market values. Market value is defined by what a seller and buyer mutually agree upon for a sales price. However, over the last several years, market value has been defined by what an appraiser will appraise the home for. You may be asking, how does this impact me? A bank will only give a mortgage for what the home will appraise for. To give you an example, if you buy a home for $250,000 and the home only appraise for $245,000 , then a home buyer may have to bring this additional cash to closing. With home sellers knowing the demand for homes today, they understand that they are not the one who will have to lower their sales price to make the deal come together. More often than not, it is on the shoulders of the buyer to make up this difference.
- Don’t be surprised if you have to pay higher than asking price – As I stated before, with bidding wars becoming more of a norm, be prepared that you may have to pay anywhere from 1-10% above the asking price.
In my professional opinion, this market will be like this for at least the remainder fo 2012 and may continue in to 2013. Many predictions have the Metro Detroit Real Estate market appreciating in value up to 30% over the next few years.