Since the pandemic, the housing market has seen some of the most competition for homes it ever has. Low inventory has drawn higher prices and the rising mortgage rates have not seen many buyers drop off.
For a typical first time home buyer in central Connecticut, home buyers can expect to be searching up to a year before they receive an accepted offer.
“The market has been exploding in the last year or two,” Josie Kamansky, realtor with EXP Realty in West Hartford, said. “It does depend on the area they’re looking in, how motivated they are and what type of financing they have.”
Cash buyers, for instance, are having no issue getting accepted offers.
“When the interest rates were 3%, there was so much competition and not a lot of inventory,” Kamansky said. “Inventory has been coming slowly, but they scoop it up so fast. I’m seeing homes come on the market and quickly under contract.”
For buyers, that could mean seeing many homes and putting in multiple offers before having one accepted. It also means jumping on homes the minute they pop up on the market.
“First time homeowners in the sweet spot of $250,000 to $300,000, it could take 3-6 months and 4-5 offers. You also have to go see it ASAP,” Kamansky said. “Why it’s taking so long [to get an accepted offer] in some cases, the houses go on the market and the buyers can only go see it at certain times. Sellers are going highest and best offers on deadline and it’s gone.”
For example, Kamansky said some of the homes she has listed in Simsbury or East Hartford, go under contract in less than three days.
“Some people I work with, it’s taking up to or over 10 months and 3-4 offers. It depends on where and what type of financing,” she said.
When approaching the market especially as a first time home buyer, Kamansky said being prepared is key. She said also you want to understand this market may not be for you.
To be a more competitive offer, she said, you need to wrap your head around going above the asking price.
“Almost no homes went below asking in the past year.” Kamansky said. “You can be competitive with inspection periods and shorten periods up. Buyers are doing a lot of as is. Or they say they want the ability to do an inspection, but not ask the seller to fix anything. Then they can still terminate if they find something they don’t like.”
Buyers are also putting down higher deposits and filling in any appraisal gaps. An appraisal gap is when the house appraises above the agreed upon price. In that case, a buyer has to come up with the funds and the bank will not finance that amount. Kamansky said she has seen some offers where buyers say they are willing to put in so much for the appraisal gap right in the offer.
“The other thing too is if the buyers find a home that needs a little work, those are more attainable,” she said. “Certain people have more flexibility in that area.”
Kamansky also suggested expanding the area you’re looking in to 2-3 towns rather than focusing on one.
“If you’re looking in West Hartford and looking for two months, maybe look at Farmington or neighboring towns,” she said. “It all depends on requirements.”
The biggest tip for buyers is to make your offer as strong as possible.
“Be flexible with the closing date, think about the appraisal gap, as is inspections with a high deposit, and short inspection periods,” Kamansky said. “Cash offers are the way to get it done though.”
Most cash offers she’s seen, though, are at the higher price points or at very low price points. These are mostly investor offers that have cash to spend.
Don’t be surprised if it’s a marathon and not a sprint. That perfect home for you will come up, it just might take some time and a little negotiating power.