The coronavirus pandemic has transformed the real estate industry in numerous ways. It strengthened the use of technology to support virtual tours, allowing buyers and sellers to engage in safe, digitalized transactions. Presently, the soaring demand for property investments has created scores of challenges for buyers and investors.
You see, the high demand has flooded sellers with lucrative offers, putting them in a unique position to prioritize their needs. The real estate industry is embroiled in bidding wars, allowing sellers to pick the highest-paying buyer.
Real estate transactions have changed dramatically, and the impact is visible every step of the way. It has altered everything, from mortgage rates to closing negotiations, urging buyers to adopt a pragmatic strategy.
With inventory dropping and interest rates stabilizing, sellers are engulfed with multiple offers for each property. So, if you like a property, you need to act fast and make an offer that’s hard to refuse. Keep reading to explore factors you must consider before beginning your post-COVID property hunt.
Understanding Post-COVID Market Dynamics
Before entering the real estate market, it’s crucial to gain in-depth knowledge of the shifting market dynamics. You see, the market is more competitive than ever, and as explained above, it’s tilted in favor of sellers. Therefore, buyers must approach the buying experience with a pragmatic and effective strategy.
The need to act decisively is of the utmost significance. But first, you must narrow down your investment goals and set priorities. Why are you vying to make a property investment? Many investors enter the industry with the plan of flipping houses. In contrast, others wish to actualize their dreams of owning a home.
In recent months, the rental industry has revived dramatically, encouraging buyers to explore real estate for a passive income stream. And in contrast, many people seek apartment renting options with affordable monthly rentals to start a living in a new region. The residential market is booming, and the housing supply is higher than ever.
However, it’s crucial to approach your vision of becoming a landlord with a solid financial strategy. You see, bidding wars have engulfed popular residential neighborhoods, and the low interest rate empowers buyers.
Setting priorities and gaining market knowledge will help you make a powerful offer and secure your property.
Be Prepared for Bidding Wars
Interest rates are lower than ever, allowing more and more buyers to enter the real estate market. While the declining interest rates have facilitated mortgage and financing, they have also heightened the competition. The forces of demand and supply have resulted in hiked-up prices, encouraging sellers to demand high listing prices.
The prices are higher than ever, as sellers are encouraged by the increased demand and influx of buyers in the market. So, you must prepare yourself to engage in bidding wars and focus on acting fast and decisively. COVID-19 has resulted in a heightened demand for property investments, and the economic lockdown resulted in record-low interest rates.
People are eager to move from expensive cities and sell metropolitan homes to reduce their hefty maintenance expenses. The rise of remote work models has encouraged professionals to look for low-expense dwellings in the suburbs. Preparing yourself for bidding wars will help you negotiate a lucrative deal and woo sellers with a solid offer.
Given the industry dynamics, buyers will have to adopt a mindful approach towards the seller’s needs and demands. Naturally, the price is a crucial and foremost consideration for sellers, but you can improve your offer with other strategies.
Here are some tricks that will help.
- Eliminate the need for a property inspection.
- Raise your binder deposit.
- Provide the seller with multiple loan approval letters.
- Offer to facilitate the seller with a rental agreement.
- Increase your down payment.
You can achieve a competitive edge and win a bidding war on your desired property by creating goodwill with the seller. However, offering more money and increasing your down payment is crucial as profit is the seller’s biggest motivator.
Adopting an Adjustable Attitude
Are you willing to adjust the seller by waiving off some of the contingencies? Sellers dread property inspections because more than 15% of the buyers walk out after the review. You can win the game by removing the seller’s biggest fear: waive off the assessment.
You don’t have to waive off the inspection entirely if it matters to your investment strategy. Instead, you can offer the seller leverage and overlook certain aspects of the inspection report. Buyers can make their offers more attractive and lucrative by reducing the contingencies.
Removing the property inspection is an excellent strategy. You can also woo the seller by pushing the closing date forward for a speedy and smooth transaction.
Waiving off the inspection is the most effective strategy as it eliminates the seller’s risk of losing profits. However, are you willing to waive off the assessment and purchase a property riddled with repairs and maintenance? This strategy will give you a potent edge, allowing you to emerge victorious in an aggressive bidding war.
Establishing goodwill with the seller and appealing to their emotional side is another effective tactic. You see, not all sellers are grounded on profits and monetary transactions. Many property owners harbor solid sentimental ties with their homes and wish to entrust their property to capable hands.
Introducing the seller to your family and treating their family to dinner is an excellent strategy. The idea is to help the seller connect with your family and understand your intentions beyond the dynamics of a financial transaction.
You can also establish goodwill by offering to rent the property to the seller. It will help the seller avoid a hasty move and relocation process. Meanwhile, you can use this arrangement to start a lucrative passive income stream. To establish goodwill, you must learn about the seller’s motivations and needs and act accordingly.
What are the seller’s priorities? Do they seek a quick selling process, the highest profits, or a responsible family to look after their home? Learning more about the seller will help you make a winning offer.
It’s crucial to present the seller with your best, most attractive offer. You must connect with the seller’s perspective to make an offer that is appealing and offers advantages. How can you facilitate the seller and gain a competitive edge over rival bidders? More importantly, how many contingencies can you afford to give?
Most buyers don’t have the luxury to increase the price or add more to their down payment. However, as a buyer, you can prioritize areas with low demands to ensure a lucrative deal.