This is a reprint of a post by Kathy Orton of the Washington Post as a follow-up to their recent online chat, “Navigating the Housing Market.” Click here to view the original post on the Washington Post’s Where We Live blog.
We received so many questions for our online chat on Tuesday that we couldn’t get to them all.
We asked two Northern Virginia real estate agents to answer a few of the questions we didn’t get to from the chat. Thai Hung Nguyen is a real estate agent with Westgate Realty Group in Falls Church. Christine Richardson is a real estate agent with Weichert Realtors in Falls Church. Here are their responses:
Q: We are looking to upgrade from our starter house in Arlington but inventory in close-in Northern Virginia has been exceedingly low during the first part of this year. Do you expect supply to catch up to demand in the coming months?
THN: Springtime usually is the time many sellers believe to be a good time to start listing their houses. Yet, this still does not guarantee a surging wave of housing inventory. Our local area needs a whole lot more inventory, and many Realtors are working diligently to promote homeownership to consumers. Seeking a Realtor’s expertise is a must to start looking for houses at this time. Realtor’s associations at local as well as national levels are working hard in various ways to help ease up the shortage of inventory, including equipping Realtors with tools and knowledge to work with sellers.
CR: I believe things will get a little better in the next few months. It is very normal for us to have extremely low inventory in January and February. Most home sellers want to move in the summer time, and so they tend to list their homes for sale in March and April. But home buyers who are planning to move in the spring or summer start looking in January and February because they are excited about starting their search and because they don’t want to feel rushed. As a result, there are usually a lot more buyers than there are sellers in January and February. Things tend to even out a little in March and April when more sellers arrive at the party. Having said that, we are still in a seller’s market, so the supply will likely not “catch up” to demand. I expect the really good homes (great condition and priced right) will still sell very quickly and with multiple offers throughout this spring market.
Q: Do you have any advice on making an offer? How do you know what is a reasonable starting price? One that allows for negotiations but doesn’t insult the owners? Is there a standard rule? Thanks!
THN: There is not set rule to offering. This is an area that a Realtor-expert comes in to play to analyze the comparables, the market trends, and the all possible scenarios that the seller is looking at. The highest offer does not mean the best offer to the seller. A good Realtor is the one who can help consumers structure the best offer to the advantage of the buyer while still stay attractive to the seller. Consult with your Realtor about your decision in making an offer. Discuss openly with your Realtor about what is important to you and what is not, so your Realtor can help you to make a clear decision.
CR: A reasonable starting price when making an offer is going to vary greatly depending on the situation you are dealing with. There are, I’m afraid, no standard rules. If the house has just come on the market and there is lots of interest, you may need to offer full price, perhaps with an escalation clause, if you want to buy the house. (An escalation clause tells the sellers that you will beat any other offer they get by $X, with the final sales price not to exceed $Y. You fill in the X and the Y when you write the offer.) On the other hand, if the house you like has been on the market for a while and you’re not likely to be competing with other offers, you can offer something a little lower and leave yourself some room for negotiation. The most common approach I see is to offer the seller a price with twice as much discount as you want to receive so that if the seller “meets you in the middle,” you’ll be exactly where you want to be. The most important aspect of all of this is to have a good Realtor advising you about what current market values are in that neighborhood and what terms to put in the contract to enhance your chances of getting your offer accepted by the seller.