Mortgage rates dropped further this week. The average rate on a 30-year fixed mortgage fell to 6.27% from 6.28% the previous week. With inflation moving closer to the Fed's 2% target, mortgage rates are expected to decrease further in the coming months, likely to be below 6% by year's end.
Meanwhile, these falling mortgage rates create opportunities for many buyers. A lower mortgage rate brings down the monthly payment for a home loan. If rates drop to 6%, 3.1 million more households will once again be able to afford to buy the median-priced home compared to the beginning of the year. And, 1 in 3 of these households are younger than 40. Last year, 1 in 5 mortgage purchase originations had a rate higher than 6%.
Some sellers are still striking real estate gold! From Bothell to North Bend, Kent, Snoqualmie Ridge, and Woodinville agents from The Cascade Team are reporting very busy open houses and multiple offer situations. For the week just ending on April 17th we had 6 area homes get into bidding war situations. Things aren’t as crazy as last year when homes often went more than $100,000 over asking with all contingencies waived, but we are seeing bidding wars drive prices $30,000 to $60,000 over asking price.
Here are the key factors for those homes:
The Home Is Priced Competitively
Hard lessons from the Zillow fiasco: Why Zillow and Redfin pricing is wrong, and how homebuyers and sellers can avoid the same mistake when pricing a property in 2023.
Being strategic about the list price can set the stage for a bidding war.
Homes that are priced aggressively to start in high demand or popular areas often attract a lot of interest. If the property is not updated or is a fixer but has been priced below market, you can also expect multiple offers. Properties that are overpriced relative to condition and location are sitting on the market whereas well-priced properties are moving — and moving quickly.
We have been involved in a nearly a dozen offers so far this year where there were multiple offers. One home had 40 offers and was a total fixer-upper, so it not only attracted buyers who wanted to buy and move into the home but also investors, as the improved value was substantially much more.
The Property Is Turnkey
Properties that are well maintained and turnkey are in high demand right now, as buyers don’t want to do work nor have the financial bandwidth to take on projects, given higher interest rates that mean higher mortgage payments.
Sellers should consider investing a bit into the property before listing it to attract more potential buyers.
A seller needs to take the time to prepare the property for sale. This means decluttering, painting, addressing any needed repairs, replacing worn carpet, freshening up the landscaping, trimming back trees and bushes, and having windows cleaned, for example. Our agents can help you with a full consultation and checklist to help get your home ready for sale!
On occasion you may need to go further depending on their property’s competition.
For example, if you are competing with a lot of new construction, you may need to consider updating the counters in your kitchen along with a new sink, replacing flooring and updating baths. For large projects like this our Home Assist program lets you access your homes equity upfront and have professional contractors make improvements. You pay nothing up front and only pay when the home sells through escrow.
It’s in a Highly Desirable and/or Wealthy Area
This one is out of the seller’s control, but it’s definitely a factor in creating appeal to multiple buyers.
In some areas, there simply may not be enough homes for sale to meet the demand from buyers. This can create a situation where homes that are available receive multiple offers, even in a cooling market.
While the market is cooling down on a national scale, there are still some areas where values are still going up. Another factor to keep in mind is that while many buyers and sellers are just scraping by in this economy, there are still people out there who have money to burn and simply have to have that particular house. This can be especially true in high-end retirement communities or fast-growing rich suburbs.
The Home Has Unique Features
If a property has features that are highly desirable and hard to come by, a bidding war may erupt when it hits the market.
Homes with unique or highly desirable features, such as stunning views, a large backyard or high-end finishes, can generate a lot of interest and competition among buyers.
It’s Staged Well
Even if the home is slightly outdated, staging can go a long way in upping the appeal to prospective buyers.
Presenting a clean, clutter-free and well-staged home can help buyers to envision themselves living there, increasing their emotional connection to the property and potentially sparking a bidding war..
This extends to the outside of the home as well.
Making sure the home looks attractive from the outside can help to catch the eye of potential buyers, increasing interest and potentially sparking a bidding war.
Marketing the home aggressively and using digital tools to reach potential buyers can also help generate interest in the home and increase the chances of a bidding war.
When buyers believe that a home is in high demand, they may be more willing to compete aggressively to secure it. This can be achieved through strategic marketing, such as listing the home as having an ‘offer deadline’ or by generating a lot of buzz through social media and other channels.
The Listing Is Strategically Timed
The timing of listing a home can also contribute to bidding wars. For example, homes listed right before the busy spring or during the summer often generate more competition among buyers.
The decline in mortgage rates over the last month likely will boost U.S. home sales by more than 200,000 as cheaper financing results in more people qualifying for loans, according to Lawerence Yun, chief economist of the National Association of Realtors.
“Each half a percentage point drop in mortgage rates results is an additional 200,000 home sales, and likely even more,” said Yun. “Since more people will qualify for mortgages, it leads to more sales.”
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