We are indeed in the middle of a mini-bubble as houses are selling faster than ever. But, there is a convergence of several factors creating this “perfect storm”:
1) Prices are still increasing but not as fast as income levels.
2) Inventory is extremely low.
3) Mortgage rates are still at historic lows as the Feds try to keep economic growth on the right path.
Like all bubbles, this one will come to an end. Even though we frequently see homes overvalued, buyers still get caught up in the heat of the moment and are bidding up prices unnecessarily. Keep in mind, appraisers count on comps amongst other factors to determine value and escalating prices and while bidding wars are nice, it still must appraise at the right amount.
Are you ready to ride the wave? Here’s what you need to do:
1. Ask yourself if your house is really ready to go on the market. Houses that are READY are selling quickly. The vast majority of home buyers, regardless of market conditions, lack vision when it comes to seeing a “diamond in the rough.”
2. You need to be completely transparent and truthful with yourself. Have a trusted friend or family member view your home and be brutally honest.
3. Why leave money on the table? We want sellers to be absolutely prepared before that “Coming Soon” sign goes up. By engaging with the open market before your house is ready, you could be leaving money on the table and not getting full price for your investment.
The formula hasn’t changed: it’s a price war and a beauty contest. We are winning the price war, but make no mistake, the beauty of a home is what gets buyers bidding.