FINANCE

HOW TO NAVIGATE THE HOUSING MARKET

WITHOUT GETTING BURNED

WRITTEN BY BRENNAN HALLOCK

Aseller’s market is brought on by demand exceeding supply, and we are in a scorching seller’s market in Johnson County. The demand is high. The houses are scarce. And buyers are ready to flash cash to get what they want. How do we navigate this craziness right on our doorstep in this peaceful KC suburb?

How do you find the right home—and get it?

“A buyer needs to be prepared and get competitive,” explains Alexis Mirakian, realtor with the Parsons|Mirakian team. “First thing a buyer needs to do is get preapproved with a local mortgage lender, because a preapproval letter will accompany any offer. Or if you are purchasing in cash, have the proof of funds ready.”

In this market, you don’t have time to be approved after you make an offer. Houses are being sold before they even hit the market, so speed is essential.

“To be competitive, buyers need to consider dropping the contingency of selling their home to buy the new home,” adds Mirakian. This may mean you will need to sell your home after you have moved into your new home. Or you could move out of your current home into a rental, and then start hunting for a new home.

You also need to do a lot of research before making an offer. “They need to be confident in the location, neighborhood, and style of home they’re looking for because once a great house hits the market it could be under contract in less than 24 hours,” explains Mirakian.

You need to be ready to make a quick offer, sometimes before you’ve even been physically inside the home. You will most likely be competing against numerous other offers, and getting yours in immediately is essential.

How do you avoid overpaying for a home?

A seller’s market has numerous benefits for the seller, and being able to price a home above its market value is one of them. Having a real estate agent who is familiar with the area and knows the true value of homes is important to avoid overpaying.

“Their real estate agent can pull the most recent comps in the area on what homes have sold for and you can see how much over asking houses are selling,” says Mirakian.

This doesn’t mean you won’t pay above asking price or market value. In a competitive market, other offers may drive up the price. But a benefit of a hot market to the buyer is that even if you pay above asking price, the home’s value will likely reach that price and exceed it in a short amount of time, maybe even a few months.

What if you are a renter who wants a home?

If you are in a rental but planning to buy, it is unlikely waiting will be beneficial. Yes, the housing market will cool off at some point and may become a buyer’s market. But there are a few reasons waiting is not helpful, even during such a strong market.

First, you don’t know when the market is going to calm down. Trying to time it will be like tossing the dice. If you have the money to purchase a home and plan to do it, don’t let the market determine when you buy.

Second, rental prices are not going down. They are only rising at a similar pace to housing prices. By waiting, you will just end up paying more in rental costs instead of putting that toward your mortgage.

And third, our money is currently at its highest inflation rate in almost 40 years. This article isn’t going to include a lesson in inflation (because the internet is flooded with those right now), but it should be pointed out that buying a home—and getting a mortgage with a low interest rate—when we are in a state of high inflation is beneficial to the buyer.

What are some signs the market is cooling off?

I mentioned before that trying to time the market is like tossing the dice. This is true, but it isn’t a perfect analogy because there are signs when the market is settling down. You just don’t know if those signs will start showing up tomorrow, next year, in five years, or in a decade.

Mirakian explains that there are a few signs to pay attention for. When most houses stay on the market for more than a day or two, things may be getting back to normal. Also, right now many houses have 40-60 showings in less than 48 hours. This is an incredible amount, and is a good gauge to determine the demand.

And the amount of offers coming in on a single home is another similar gauge. Right now many homes are getting 15 or more offers.

A realtor can help you watch for these signs and others. If you need help finding a home or selling your current home, the Parsons|Mirakian team is happy to assist: parsonsmirakian.com.

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