Buying a home in Ocean County? Understanding the current Ocean County Real Estate Market can prepare you to make the right strategic move!
In today's market, buyers shouldn't shop for a home with the expectation they'll be able to negotiate a lower sales price - unless the home is grossly overpriced. In a typical housing market, buyers try to determine how much less than the asking price they can offer and still get the home. From there, the buyer and seller typically negotiate and agree on a revised price somewhere in the middle.
Things Are Different Today
Today's housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:
- Receiving an average of 3.8 offers
- Selling is just 17 days
Homes selling immediately and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale. Low supply and high demand mean homes often sell for more than asking price. In some cases, they sell for a lot more. For instance, I recently sold two homes, one in Bayville and the other in Manahawkin, both sold about $25,000 over an already high asking price. Selma Heck, Deputy Chief Economist Economist at CoreLogic, explains how these statistics can impact buyers:
"The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months. Now, 6 in 10 homes listed are selling over asking price."
You May Need to Rethink How You Look at a Home's Asking Price
What does that mean for you? If you've found your dream home, you need to be realistic about today's housing market and how that impacts the offer you'll make. Offering below or even at a homes asking price may not cut it. In today's market, the best offer (not always the highest) often wins the home. Though it can seem like an auction.
Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the owner's are asking. That's important to keep in mind as you work with your agent to craft an offer.
Understand an Appraisal Gap Can Happen
Because of today's home price appreciation and auction-like atmosphere in the selling process, appraisal gaps - the gap between the price and your contract and the bank's appraisal for the house - are more common.
According to Date from CoreLogic: Beginning in January 2020, 7% of purchase transactions nationally had a contract price above the appraisal, but that's risen to over 19% of transactions today.
When this happens, your lender won't loan you more than the home's appraised value (not assessed value, that's a different 'valuation') and the seller may ask you to make up the difference out of pocket. Buyer's in today's market need to be prepared for this possibility. Know your budget, know what you can afford and work with a trusted advisor who can offer expert advice.
Bidding wars and today's auction-like atmosphere means buyers need to rethink how they look at the asking price of a home.
Karl Hess provides expert real estate services to residential buyers and sellers in Ocean County. Contact us today for more information on Ocean County Real Estate and for professional assistance in navigating this complex housing market.