Homes Were Purchased at Record Speed in February. Here's How Buyers Can Navigate a Fast-Moving Market
by Maurie Backman | Updated July 19, 2021 - First published on March 24, 2021
Properties sold fast in February, leaving many buyers out in the cold.
Though mortgage rates rose in February, properties managed to fly off the market, nonetheless. Last month, the typical home stayed on the market for a record-low 20 days, down from 36 days a year prior. In fact, almost 75% of homes sold during the month of February lasted less than a month before being scooped up by buyers. And homes that sold between $250,000 and $500,000 lasted just 14 days.
Fast-moving properties are a good thing for sellers. For buyers, not so much. If you've struggled with this fast-moving market, here are a few tips for navigating your home search.
1. Be prepared to make a decision
When properties are selling like lightning, you can't afford to hem and haw over making an offer. Instead, be prepared to move quickly. Follow a home buyer checklist and be aware of all of your must-haves. When you find a home that meets your requirements, put an offer out that day -- don't wait. But also make sure your offer is attractive. In today's market, many homes are selling for well above their listed prices, and if you go in with a lowball offer, you won't be doing yourself any favors.
2. Come in with pre-approval
Mortgage pre-approval doesn't guarantee you a home loan. But it does show sellers that you're a serious buyer whose finances are in good enough shape to get a mortgage. If you make an offer along with a pre-approval letter, you're more likely to get it accepted than if you were to make an offer with nothing to back it up.
3. Make cash offers
Many buyers can't afford to pay for a home in cash -- that's what mortgage loans are for. But if you are able to make a cash offer on a home you're interested in, do it. Sellers tend to favor cash offers because they're a sure thing. When your offer hinges on you getting a mortgage and having to close on that mortgage, a lot can go wrong. And if your home loan doesn't come through, your seller will be out of luck. Some sellers, in fact, are willing to accept a lower offer if it means not having to deal with the mortgage process.
4. Be very flexible
Some of today's sellers want to sell quickly. Others want to delay their closings for various reasons. The more flexible you're willing to be as a buyer, the more likely you'll be to get your offer accepted.
Will the market cool down?
Right now, a big reason homes have been selling so quickly is that there's such limited inventory to choose from. In February, there were a mere 1.03 million homes on the market -- a drop of 30% from a year prior.
As more homes get listed, though, the market should calm down a bit. Traditionally, spring has been a popular time to list a home, but whether this spring's inventory picks up a lot will depend on where we're at with the pandemic and the state of the economy, among other factors.
Hopefully, things will turn around soon. But until that happens, the market could stay tough for a while. In the meantime, be ready to navigate this fast-moving market.
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