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Ask an Agent: Buying in a Complex Market
— ASK AN AGENT —
Buying in a Complex Market
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When inventory is low and competition is fierce, what can a buyer do to get an edge? by Bernadette Starzee
IGH DEMAND combined with record low inventory in major markets around the country means that buyers searching for a new home have their work cut out for them. But take heart: Properties are changing hands at a brisk pace, so with smart preparation and by calibrating your expectations wisely, your real estate journey can be a successful one. H Here’s what you need to do.
1. FIRM UP YOUR PRIORITIES. “No matter what price
Decide what matters most to you: space, price, location, or stellar views, like those offered in this lower Manhattan apartment. range you’re in, you will always have to compromise,” says Ann Cutbill Lenane, a licensed associate broker in the Manhattan office of Douglas Elliman Real Estate. “So the question is, What’s important to you? If you have one child and are planning to have more, space is probably going to trump view. If you’re older, you might appreciate a house that has a bedroom on the first floor. That might be more important than a brand new kitchen.”
2. GET YOUR DOCUMENTS IN ORDER. Like other Elliman markets around the country, demand for properties in Manhattan is outpacing supply, especially
for larger apartments. When a property that’s priced right comes on the market, it sells fast. Even apartments at higher price points don’t stay available long.
In such a market, it’s essential to have all your ducks in a row so that when something you like comes on the market, you’re prepared to act.
“First, you need to get preapproved for a mortgage. That involves running a credit report and taking care of any issues you find,” Lenane advises. “Second, make sure you feel confident in what the marketplace valuation is. If you’re not ready to buy but think you will be soon, go to open houses. See as many properties as you can.” This is particularly important when inventory is low and buyers find themselves feeling rushed about making an offer before someone else snaps up a property they might want, she says. 3. BE READY TO ACT FAST. “You need to be flexible with your availability,” says Leigh Stubbs, a licensed real estate agent in Douglas Elliman’s Houston office. “Be ready to see a property the day it comes on the market.”
In normal times, buyers might wait for the weekend to go see a few houses at once. But “in this market, if a house
—Julian Cohen, executive director of luxury sales, Miami Beach
Royden Oaks is one of Houston’s most exclusive neighborhoods, beloved for the mature trees that line its streets.
—Leigh Stubbs, licensed real estate agent, Houston
becomes available on a Tuesday, you have to be willing to get in the car and come out, without waiting,” says Terry Thompson, a licensed real estate salesperson in Douglas Elliman’s Hamptons market. And if you’re buying your home with a spouse, partner, or others, don’t wait until everyone is available.
“Establish yourself with the broker as an interested buyer by going to see [the property], even if the others can’t. You can always come back for a second showing,” says Julian Cohen, executive director of luxury sales in Douglas Elliman’s Miami Beach office. “Don’t delay submitting an offer; time kills deals, especially in a market like this. Get yourself in the game as soon as possible.”
4. COME IN WITH YOUR BEST OFFER. Buyers need to have a clear understanding of their budget and what their ceiling is, because they can expect to pay the full asking price—or more. “A few years ago—even a year ago—people had more negotiability, but that’s gone,” Thompson says.
Price isn’t the only deciding factor for sellers; as a buyer, you need to be prepared to offer the best contract terms. “Cash is king. If you’re able to offer cash or a big portion of cash, that’s more desirable,” Stubbs says. “And keep in mind that sellers are not going to give much value to contingencies. Focus on trying to have your contract as contingency-free as possible.”
For instance, according to Thompson, “99 percent of
South Florida’s housing market has been growing at a brisk clip, making waterfront properties like these in Fort Lauderdale highly desirable.
A traditional Hamptons-style home by Juan Montoya in the East End, New York
—Terry Thompson, licensed real estate salesperson, Hamptons
Hamptons homes are more sought after than ever, thanks to the remote-work paradigm and a growing desire for fresh air and outdoor space. the sellers” will balk at a contract with a clause that states the sale is contingent on the buyer getting a mortgage for the property. “Make sure the bank’s commitment to you is solid,” Thompson advises. “But be prepared to have the funds available if something happens to the mortgage and you have to come up with the cash.”
In today’s market, contract prices are rising faster than appraised prices, which are based on closed sales of comparable properties. “Let’s say you offer $950,000 for a property at an 80/20 ratio, which means you will be putting 20 percent down and getting a mortgage for the rest, but the property appraises for just $900,000,” Thompson says. “Keep in mind that the bank will only approve a mortgage based on the appraised value.” That means in addition to the 20 percent down payment, you will be responsible for $50,000 up front—the difference between the sales price and the appraised value.
5. CHOOSE YOUR AGENT WISELY. Having a close relationship with a seasoned, well-connected broker will help ensure that you learn about new properties that match your goals in time to act.
It’s important to “find someone who specializes in your neighborhood,” says Lenane. “Tell them what you’re looking for and ask, Have you sold in this price range? Have you sold in this location? How long have you been doing this? Look at their website. Are they organized? Are their pictures good? Do they get back to you right away? When you ask what has sold in the area, do they have the information at their fingertips?”
“You want a good agent who will be keeping an eye on the ‘coming soon’ listings and who has good contacts for off-market sales—someone who will knock on doors to find properties that aren’t even listed yet,” Stubbs says.
What’s more, a well-connected broker can give you an in with off-market sales. “I’ve been reaching out to sellers I’ve sold to in the past, letting them know that if they
—Ann Cutbill Lenane, licensed associate broker, Manhattan
ALEXANDER SPATARI/MOMENT/GETTY want to sell now, they can get a premium,” Cohen says. “Many transactions lately have been off-market. I also have relationships with other brokers, and I collaborate with them on off-market opportunities to offer my clients as many opportunities as possible.”
An agent who has strong relationships with other agents is a great asset in a multiple-bid situation. “When I tell the other broker that my buyer is solid, they know I’m not going to bring them a buyer who’s going to drop out,” Thompson says.
A loyal agent will also be there to help you rebound if you don’t get the first house. “I tell people, make your best offer,” Thompson says. “But if it doesn’t work out, there will be another house.”
Demand exceeds supply for properties in Manhattan, especially in coveted areas like the stretch of Fifth Avenue bordering Central Park.
