Key Metrics To Consider When Making Your Offer On Your Dream Home
Did you know that the average home buyer sees ten homes over a ten week period before they find the perfect home? (1)
That’s the usual metric, and only time will tell if the pandemic and resulting lower inventory shortens the time frame and increases the number of homes seen. Inventory is tight in many markets, and that may be due to folks not wanting to move during a health crisis; negotiated, delayed payment terms with current mortgage providers; worry over financial uncertainty; and/or the inability to qualify for a new home based upon changing financial circumstances.
Given the tight inventory, your perfect home may receive multiple offers, especially if it’s dreamy and priced right.
Here are a few key metrics to consider when making the right offer:
- Are you bringing cash - or - might you be competing with another offer that is all cash? The percentage of cash offers have been declining over time, but are still a significant presence. In 2017, 23% of home sales were all cash. This May, 17% of home sales were all cash. In June 2020, the number dropped to 16%. (2,3,6)
- Do you need to sell a house or do you have other significant contingencies beyond the usual house inspection and financing approval? If so, you’re in lots of company. Even during the pandemic, 76% of recently closed sales in May 2020 had at least one buyer contingency. (4)
- According to the National Association of Realtors in their July 2020 report, recent sellers sold their homes for 99% of the listing price. 40% of sold homes had the asking price reduced at least once. (5)
- Most mortgage lenders are confirming a 45 day close for a conventional loan. The median time for home closings in June 2020 is 30 days. (6)
- Currently, 77% of first time buyers put down less than 20% as their down payment. (6)
That’s a lot to consider as you put together the strongest offer possible for your dream home.
Sellers will be evaluating your offer, and want a buyer who can close the deal. Selling your home is hard enough without having to do it all over again if (yikes!) the first buyer can’t get to the close. Looking at the numbers from April through June 2020, note that seven percent of contracts didn’t make it to close.6
That’s a lot of pain for both the buyer and the seller. So, do your homework, and purchase what you can really afford. Get prequalified, and be realistic about your timeframes. And put your best foot forward!