By SAMMY DWECK
As we head into the busy spring housing market, there are a greater number of motivated buyers than there are properties listed for sale in the Washington, D.C. metro-area. This high demand/low supply ratio puts an upward trend on prices and means sellers can demand more advantageous contract terms for their properties from purchasers. This is a sellers’ market and buyers this season need to be prepared for what is going to be a nearly unprecedented inventory crunch, particularly for properties in the District. That’s a good thing for D.C. in general but can provoke some anxiety for homebuyers. Worry not, the sky is not falling and with the continuing low interest rates available, it’s a great time to buy and build equity in your property.
While home sales prices have almost recovered to peak pricing in 2005-2006 in the close-in D.C. metro-area market, property owners who purchased back then are sometimes reluctant to sell, even at a small loss, given their closing costs (commissions, transfer taxes, mortgage payoffs, etc.) may leave them with little equity. With high rental prices and interest rates so low, buyers want to buy, but sellers don’t necessarily want to sell.
Potential buyers need to understand the dynamics of this fast-moving and competitive housing market to have realistic expectations and be ready to act quickly when they find a property they want to purchase.
Here’s what to be prepared for: You will be competing with other serious and highly motivated buyers on most properties that are priced well in many of the popular D.C. metro-area neighborhoods. Some buyers will have substantial down payments on hand that make the financing more of a “sure thing.” Sellers fear putting properties back on the market after losing a contract and having other potential buyers think something is wrong with the property. The fewer opportunities you leave yourself to walk away from a contract, the more likely the seller is to accept your offer over someone else’s.
Don’t expect sellers to accept a home sale contingency contract this season. By the time you put your property on the market and sell it, the seller could have missed other opportunities. Some terms to win with are informational inspections – where you conduct an inspection, but agree not to negotiate for repairs, as well as shorter appraisal and financing contingencies. Be cautious when waiving or modifying appraisal or financing contingencies. You absolutely must be on the same page as your lender – you do not want to put your deposit at risk. Be sure to go over options for making a strong offer with your agent, and don’t be afraid to ask questions. You must work with an agent who knows how to balance your best interests with making an offer that has appealing terms to the seller.
Single-family homes and townhouses in popular downtown Washington, D.C., and close-in metro-area neighborhoods that buyers perceive as increasing rapidly in value are where we’re seeing the most intense bidding wars. Appropriately priced properties that show well are seeing multiple offers within a few days and sometimes hours of the property being listed. A recent listing of ours that just sold went for $30,000 more than the asking price on the first day we presented offers with just three offers.
Before you go out into the housing market, you should have realistic expectations about what to expect and be prepared. You and your agent will need to be in sync and ready to move quickly when you find the right place. Like everything else in life, buying a home is about expectations. If your expectations for what you’re going to live in are in line with the market, you’ll find something great soon enough.
Sammy Dweck of The Amber & Sammy Group with Evers & Co. Real Estate, Inc., is a licensed real estate agent specializing in townhouse, condo and co-op sales in the D.C. metro area. Reach Sammy at Sammy@SammyDweck.com or call 202-716-0400.