Competing with Cash Offers as a First Time Home Buyer
This housing market has been a wild ride! From the slower spring market of 2020 to the rapid rise in home prices throughout the remainder of the year, even 2021 continues to change rapidly in terms of inventory and pricing. Overall, reports initially stated first time home buyers were negatively impacted by COVID-19. Further reports helped us to understand the true impact the pandemic has had on buyers.
Liberty Street Economics found that “Given the rising house prices and continuing high unemployment, concerns arose that COVID-19 may have negatively affected first-time homebuyers. Using a new and more accurate measure of first-time homebuyers, we find that these buyers have not been adversely affected by the pandemic. At the same time, gains from lower mortgage rates have gone to existing homeowners and not to households purchasing their first home.” Although the general consensus is that first time home buyers were not negatively affected, there are still factors that can negatively impact individual sales.
Within the current summer market, we’re seeing bidding wars, higher home prices, and cash offers making first time home purchases a challenge. REALTOR® Magazine stated the following:
“The median home list price rose 13% annually in June, reaching a record high of $385,000, according to realtor.com®’s data. Rental prices reached a median of $1,575 in June. Young adults are facing high rents that are making it more difficult to save for a down payment.
Meanwhile, the percentage of first-time home buyers fell to 31% in May and June, which is the lowest level in more than three decades, according to NAR research.
“For this housing cycle, many first-time buyers probably missed the boat,” Ali Wolf, chief economist of building consultancy Zonda, told realtor.com®. But “housing is a cyclical business. So while it feels like prices will only go up forever, the market will change. It always does.”
Once more homes are listed, first-time buyers may face less competition. Some hope that is starting to occur: The number of new listings on realtor.com® rose 9% in the week ending July 24 compared to the previous year.”
So now we put ourselves in the first timer’s shoes. It can be intimidating competing with cash offers as a first time home buyer, no question about it. How can we, as professional REALTORS®, help support our first time buyer clientele? The best advice is often the most simple too! We highly recommend focusing on making your buyer’s offer the easiest to accept in order to increase the chances of a successful sale. Money may talk, but focusing on what the seller is looking for in a sale can give you and your clients an advantage.
NerdWallet’s list of common items on a home seller’s wish list is a helpful reference:
- A hassle-free transaction with easy-to-work-with buyers.
- The highest price.
- For the buyer’s transaction to close quickly and on time.
- To deal with as few contingencies as possible.
- To remain in the home after closing for a few days up to two months.
- To avoid paying for or supervising repair work.
As a REALTOR®, staying up to date on the latest news and trends for first time home buyers can pay off for your transactions that may be more of a challenge. We hope the above information was helpful and will be put to good use in helping get first time home buyer’s into their new homes, especially in this challenging market.
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