When Paige Schulte and her family needed more space this year, they decided to sell their house and buy a new one.
But buying a house in Gig Harbor, Washington, didn’t prove to be so easy, as they were competing with multiple buyers on every house they saw.
“We specifically wanted a certain floor plan that was really popular here,” Schulte says.
The seller wanted $1.5 million for the house they ultimately settled on. To make their bid stand out from all the rest, Schulte, a real estate agent, looked for ways they could offer the seller better terms than other buyers. "Price is king but terms are queen and she runs the show,” Schulte says.
First, they sweetened the deal through the appraisal: If it turned out to be lower than expected, they offered to cover the gap between the appraised price and the purchase price.
Then they reassured the seller that they would not back out of the deal by waiving the inspection. “I knew that once I got in there, I would have an inspector come in and I would pay for whatever needed to be fixed,” she says.
Their strategy worked and the Schultes closed on their house in February.
While Schulte admits those concessions are not in the best interests of the buyer – and would readily tell her clients that – those are the types of strategies buyers are using to buy a house in today’s market.
Bad news for homebuyers
In their 2021 Housing Forecast, Realtor.com predicted that 2021 would be tough for buyers. Sellers would be able to command high offers and home prices would soar. On top of that, they projected housing inventories would remain somewhat low because of buyer demand.
That spells bad news for home buyers, as increased competition means sellers are more likely to have their pick of potential bids.
“Bidding wars are clearly a sign of supply and demand,” says Alison Bernstein, founder of Suburban Jungle, a real estate advisory firm that helps home buyers leave urban areas for suburban ones. Once a buyer enters one, “the key is not to get discouraged but to suit up.”
That means getting creative and finding a way to make your bid stand out.
Competitive housing market
When Elizabeth Porter and her husband Cameron were looking for a house in central Michigan this year, Porter had no idea how competitive the market was until they had made five offers for houses and lost every single one of them.
“We were going up against six, seven, sometimes eight offers on each house that we wanted,” she says. “That was when I was like, ‘OK, we're going to need to do something different.’”
To stand out, Porter tried to put herself in the shoes of the seller to see how her family could make their life easier. First, the Porters offered to spend a few hundred dollars extra on some of the seller’s smaller closing costs such as title transfer fees.