As a home buyer in today’s Austin housing market, you’re undoubtedly at your wit’s end trying to find your dream home. Even when you do find a home you love, you’re competing with all cash offers and bidding wars driving the sales price above what it’s listed for and many times, even above what the home is actually worth! But, you already know that. Here are 5 keys to buying in Austin’s strong seller’s market.
Prepare Yourself for Battle
While you can’t do anything to infuse more homes into Austin’s lean market, you can certainly educate yourself by understanding the trends and patterns in the neighborhoods you’re trying to buy in. While it’s clearly not quantum mechanics, there is definitely a noteworthy advantage to those buyers who understand the trends of a real estate market. Understanding the nature of the market, and preparing yourself for the journey (or battle) is probably the most critical step for managing your expectations.
What’s Driving Austin’s Housing Market?
Household formation is the key factor driving the resurgence in home prices and rents. In Austin, the spike in the number of new households is because of a massive population increase due to a powerfully enticing job market. With home prices rising faster than rental prices, would-be home buyers – previously sitting on the sidelines – are scampering to become home owners before prices move out of reach.
Homes in Superior School Districts are Selling Fast
Selected segments of the Austin housing market appear to be placing an increased premium on homes located in neighborhoods served by superior schools. When average days on market decrease moves steadily down coupled with list prices and price per square foot averages increasing consistently in tandem, as they’re doing now, we are in a seller’s market. In a seller’s market we expect to find median and average prices on the increase and available inventory declining which is exactly what is happening here. Hence, prices increase, available inventory decreases and home buyers become frustrated and disheartened. But, again you know that too.
5 Keys to Buying a Home in a Strong Seller’s Market
Over the years, we’ve seen several sellers markets, some even stronger than the one we’re seeing today in Austin. Here are 5 keys to buying in Austin’s strong seller’s market.
#1: Be Prepared
Things move quickly in a seller’s market. Buyers who are prepared to move with the pace of the market are more successful than those who aren’t. How can you get prepared? Get fully pre-approved before you start your house hunt. Sellers are requiring buyers provide some sort of proof they can actually afford their home before they accept their offer. If you’re paying cash, arrange to get a proof of funds letter from your bank. Been pre-approved? Great! The next step is to monitor the market in the neighborhoods you’re considering. This way you’ll know how well priced a home is when it hits the market and you can craft your offer accordingly. Ask your buyer’s agent to set you up on a search that shows you sold data for each neighborhood you’re considering. Finally, have your buyer’s agent explain the purchase contract to you before you find a house. This is one of the first steps in the process with the buyers we work with. Explaining the contract before you have identified the house not only helps you understand what you have to do and when you have to do it, it is also much easier to digest when you aren’t thinking about what color to paint the living room or stressing about how many other offers there are going to be.
#2: Know What You Want and Where You Want It
Identify the type of home you’re looking for and where you can find it (neighborhoods, zip codes, etc). Set up email alerts, so you are the first to be notified when a home that meets your criteria is listed for sale. The best homes are selling quickly, sometimes within a couple of hours. Waiting until the weekend to see what you missed during the week might mean you are only seeing the homes that have already been picked over. Proactively attack your home search and you’ll have the best results.
#3: Respond Promptly and Decisively
Once you find a house, put together a carefully crafted offer as soon as you can. Your buyer’s agent can help you determine what things should be in your purchase offer. For example, when we are representing a buyer, we call the seller’s agent and ask what specific things the seller is looking for so we can write the offer in such a way that the seller would be afraid to turn it down. Our goal is to help you get the house without having to overpay for it. So, if we can entice the seller with terms, move dates, etc, we can generally save you some money.
#4: Use an Experienced Buyer’s Agent
An experienced buyer’s agent (one who has been around for several years) has been through a strong seller’s market. They know the tricks to making their clients home owners. We’ve helped hundreds of buyers over our combined 60+ years of experience. Needless to say, we know the ins and outs and buying homes. When you’re in a competitive market like a strong seller’s market, nothing can replace experience. And, the seller pays your buyer’s agents commission, so it costs you nothing additional to hire your own Realtor who is going to fight for your price and fight to get your offer accepted.
#5: Shrug Off Rejection – The Right Home May Pop-up Tonight
This is probably the biggest key to surviving a strong seller’s market as a buyer. You can do everything you possibly can, but sometimes your offer may not be accepted. And, it’s not always about price. The seller can accept any offer for any reason they want. Put your best foot forward and trust fate a little. Every single buyer we’ve worked with who has not been the winner in a competitive offer situation (one couple lost out 7 times before they were successful), has always said the house they ultimately ended up with was the one they were supposed to buy. This list also includes my daughter. Though it may be hard to see it right after your offer is rejected, trust that something else will come up soon.
How Long Will this Strong Seller’s Market Last?
We’re often asked this question and though we don’t have a crystal ball, we know people are pouring into the Austin metro area. Last figures we heard, 170 people per day were moving to Austin from outside the area. Combine this with the people who already live here and that’s a lot of people looking for homes. Though home builders are ramping up production, they are having a difficult time keeping up with demand. So, as long as the number of new households created grows faster than the production of new housing stock and affordable financing is available, we would anticipate this strong seller’s market to continue. Watch our Austin Real Estate Price Reports for a monthly commentary on the market for more on this.
Should a Home Buyer Put Off their Search Until the Market Calms?
The short answer is no. As the seller’s market continues to pick up speed, prices will start to go up. And at some point, interest rates will rise. Combine price increases with interest rate hikes and the neighborhood you can afford now may not be a reality in 6 months. If you’re willing to live in your second tier neighborhoods and would rather not compete with other buyers, then wait. But, if you’re looking to live in the best neighborhood you’ll comfortably be able to afford, grit your teeth, get out there and find something. We can show you how to be successful as a buyer in a strong seller’s market.
Ready to Start the Home Buying Process in Austin?
If you’re looking for an experienced buyer’s agent who knows how to get offers accepted, check out our Austin Home Buyer page to learn a little bit more about our team. We are a genuine team, so you get 3 agents for the price of one, and we’re experienced (55+ years combined). Call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation conversation.