While watching what has occurred with my buyers and sellers over the past few months, I have noticed that most buyers have been getting beaten up in the market. Due to the combination of low interest rates, fewer available properties for sale, and the high volume of cash buyers and investors, the market is extremely competitive. Many buyers have made four or five offers on properties, but have not been successful. Some have even told me “You know what? I’m just going to put my search on hold until next year.”
Many sellers are also waiting until next year to consider selling because people don’t usually buy houses in November or December. However, the fourth quarter of this year is probably the best opportunity to buy or sell property. Here’s why:
Traditionally, the real estate market slows down considerably during an election year around November, thus allowing buyers an opportunity to purchase property in a less competitive market.
Buyers can also capitalize on interest rates as low as 3.25% with a 30 year fixed. Although rates might remain low over the next couple of years, around 4.5 to 5 percent, I doubt rates will remain as low as 3.5% for much longer. An interest rate increase of 1%, from 3.5 to 4.5, is still an amazing rate. Unfortunately, buyers will need to be more selective if rates increase by 1%, because they loose 10% of their purchase power.
My advice to buyers: Buy a property before the New Year while the interest rates are exceptional, and use January and February to fix up your new house.
There are hundreds of buyers out there right now who would love to buy property, but are unable to do so due to fewer properties being available for sale. Consequently, buyers are willing to pay more for properties they want because of the low inventory. The combination of low interest rates and low inventory establishes the perfect climate for sellers to capitalize on today’s market.
Properties are selling quickly with multiple offers. Nearly every house that I’ve listed that was priced appropriately and showed well sold within ten days. Houses that sold within a week got five to ten offers. If a property is still on the market after two weeks, it is probably overpriced or has some cosmetic problems or feng shui issues.
Sellers hold control right now due to the low inventory so they don’t have to sell a property at the price it is listed for. Since there are fewer available properties, buyers are willing to pay more. By listing a house a little bit under market, sellers can draw interested buyers that are willing to pay $20,000/$30,000/$50,000 over appraisal values just to get into something.
My advice to sellers: Sell before the New Year while the interest rates are low and buyers have more purchasing power. You can then recover from the holiday season with the profits made from your sale.