San Francisco – The Sellers Market

What makes a “seller’s” market?  Especially in the ultimate sellers market – the Bay Area.  Low inventory, high demand, and climbing prices are what constitute as a sellers market by definition.  While its great for sellers, it can be very difficult for buyers looking for their dream home that is affordable.  Buyers come to me from other lenders or from having heard from their friends that have been in the market stating that feels like a mismatched fight.  One where they feel the deck or odds are stacked against them.  

Finding the right property, nailing down your financing, and winning the fight of getting your offer accepted is absolutely possible. As a coach for the US TaeKwon-Do team, I always tell my athletes that its all about playing your strengths. So in preparing a buyer to get out there in the fight we refer to as the housing market, its important that we do the same for you and play your strengths.  

Currently the housing demand index is showing that prices and demand are at all time highs.  On top of that, supply is hitting an all time low, reflecting roughly a 3 month inventory of homes.  A healthy market balanced between buyers and sellers reflects a 6 month inventory.  Demand has increased these last few years sharply for a number of reasons.  The overall economy trending stronger is on catalyst.  Couple this with strong hiring, increasing incomes, and low interest rates.  Builders aren’t adding new inventory to the market fast enough, so the majority of these homes hitting the market are existing resales.  

So what is a buyer to do?  How do you prepare for all this and flip the odds in your favor, or at the very least – level the field?   Starting your search early is critical, and doing so with the right resources.  Agents I work with like to get their buyers set up on data websites like Real Scout which are interactive and very easy to use.  They help sift through the data of all that is out there, provide geometric data, and allow buyers to use some more refined filters in their ongoing search.  This step, along with partnering with the right agent who is an expert in your market is a great first step.  Your agent will know what caveats could sweeten a potential deal, such as being flexible on your moving dates/timeline to accommodate a seller that may need to rent back the hoe for 1-2 months.  Or connecting with the sellers on a personal level (kids attend the same school, other interests, etc) to pull on those heart strings when eventually making your offer.  

Most importantly, money talks in this equation.  Most lenders are “Pre-Approving” buyers now (takes pre-qualification a few steps further).  Few lenders are actually “pre-underwriting” buyers, which effectively takes a buyer through 60% of the actual loan process.  Ultimately this allows a buyer to use a much shorter contract period in their offer, as well as potentially enter the offer with no financing contingency.  In some cases, this can make a buyer nearly as competitive as a cash-buyer.  A fast closing timeline and bullet-proof financing are making sellers look closer at financing offers over just the popular cash-offers.  

Lastly, its important to manage your expectations.  Have a back-up plan with homes so that you are never dropping your emotional eggs into just one basket.  Come in expecting to make a few offers before yours might be accepted.  

I specialize in the pre-underwriting process and work to complete it within one week for buyers.  To learn more about this and being better able to compete in the ultimate sellers market of the Bay Area, email me anytime at arjun@lendclear.com.