BY CINDY GERLACH
If you are hoping to sell your house, good news: It’s a great time to put your house on the market. But if you’re a first-time home buyer, be prepared. It might be tough for you to get your offer accepted in a tight market.
Properties that are priced in that “sweet spot” — properly priced and in reasonable condition — are seeing single-digit days on the market and multiple offers, says Charlie Shook, broker and co-owner of Coldwell Banker Shook. Right now, that “sweet” price is from $150,000 to $350,000. Prices that might have once been considered fairly expensive are now seen as the norm. It’s a reflection of the economy, of supply and demand.
“It sounds exciting, but it’s really just a reaction to the economy,” Shook says. “Brokers don’t want that. It makes prices go up. There are more buyers than product.”
Inventory in Tippecanoe County is at historic lows, says Stacy Grove, a broker and owner of the Russell Company. On one day in early March, active listings for single-family houses were at 67. But when filtered for those that had offers, that number dropped to 46. Of those listings, 12 were in West Lafayette. The prices ranged from $79,900 to $1.5 million. And of those 46, only 19 listings were under $300,000.
“People don’t understand the crisis that is our inventory shortage,” Grove says. “We just don’t have the new construction to back up the inventory demand.”
For sellers, this means a potential profit. People used to have to hold onto a house for several years before they could see making any money with a sale; now, Grove says, properties can appreciate up to 1 percent a month; one need only own their home for a short time before they can recoup their costs and see a return.
For those trying to buy their first home, the process might be an arduous one. Most listings for houses under $300,000 are seeing multiple offers, many above the asking price.
“We’re seeing multiple offers over the list price,” says Grove. “The list price used to be our ceiling, now it’s our floor.”
Buyers are waiving inspections and writing offers without contingencies. Some buyers are able to write cash offers, getting temporary loans to avoid financing. And they are adding what is known as an escalation clause, offering to beat the best offer up to a certain amount.
“It’s a valid strategy,” says Shook. “Those intangibles are becoming more and more popular.”
And when prices are not reflecting the appraisal, buyers are offering to pay the difference in the appraisal gap, says Grove, essentially taking an advance on their equity.
“It’s the Wild West out here,” Grove says. “It is crazy.”
Thus it’s a great time to sell your house — if, that is, you have someplace to go. Because the story for buyers, especially first-time buyers, is not so rosy.
Getting your offer accepted may be a path fraught with disappointment and frustration.
But even though it seems abnormal, some buyers are seeing their offers accepted. One just has to be ready and prepared to make an offer — there probably isn’t a lot of time to consider your options. Look at a house and be ready to act immediately. Write your best offer. And be prepared for little to no negotiating.
The best advice for a buyer? Use an agent, says Markus Jamison, team leader at Keller Williams.
“If you’re just googling properties, by the time you get on there, it probably already has an offer. And get prequalified.”
It is, Shook says, a great time to invest in real estate. The uptick in prices certainly is evident. In 2019, 40 homes in Tippecanoe County sold for more than $500,000; in 2021, that number was 116. For homes in the $400,000-500,000 range, 2021 saw 136 sales, compared to 82 in 2019.
“Our market has been undervalued for years,” Shook says. “My gut feeling is people are feeling more confident about investing in real estate.”
People who think they may build a house instead are likely in for a surprise — and a wait. With supply chain issues, materials are more expensive. The estimate to build a ranch house, on a slab, is around $450,000, Grove says. Add a basement, and the price jumps to $650,000.
With interest rates predicted to go up in the coming months, the market could change. But it may not be to a buyer’s advantage, says Grove.
“At some point, with inflation going up, people will be spending more on necessities,” she says. “At some point, they won’t have the money for a mortgage they once did. The buyer pool will shrink because they won’t have the liquidity they once did.”
Jamison says it’s anyone’s guess what will happen. But with rates at historic lows, buyers could still be in a good position.
“That’s the plus side,” he says. “In the long run, you’re not paying as much. It’s a tug-of-war, and we don’t know where it’s going.”
Shook encourages buyers to not get too frustrated. It may take some time, but your dream house is out there. He projects that 2022 will look a lot like 2021 did, but some of the pent-up demand will abate.
“The professional real estate community understands the angst, the pain a buyer has to go through,” he says. “It’s hard to call a buyer four or five time and tell them they didn’t get it. But I’m always amazed at how often the next house is better.” ★