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How to avoid getting burned in a hot housing market

By Julie Tramonte

September 2018
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Nothing is more disappointing to a first-time homebuyer than finding an adorable house and making an offer – only to have the seller choose an offer from another buyer. Unfortunately, in today’s ultra competitive housing market, that’s become the new norm. Just ask Anna and Nathan.

 

After making offers on 13 homes in Wauwatosa, Wisconsin, during a 6-month period and being outbid on all of them, Anna describes their house-hunting experience as a “struggle.” She and Nathan even offered $26,000 above the asking price for one house – but it wasn’t enough. The whole process became so stressful that the couple decided to take a break from the emotional rollercoaster. 

“The Greater-Milwaukee market is crazy,” confirms Diane Newton, an associate VP at Shorewest Realty with 34 years of experience. “I’ve seen offers come in at $50-70k over asking price! That isn’t typical, but it demonstrates how tight the market is right now.”

So what’s a buyer to do? Here are a few tips to give you a competitive edge: 

Technology is your friend

Have your real estate agent set you up with automatic listings so you don’t miss anything coming on the housing market. Diane also recommends getting set up for “delayed listings,” which are houses not available for showing yet. (It’s a tactic used to build excitement.)

Another young couple hunting for a house, Jessica and Brandon, checked real estate apps daily. They also followed a real estate company on Facebook, where the company shared new listings that would be entering the Wauwatosa market. 

“When we knew a house was coming on the market, we’d try to rearrange our work schedules to be the first ones to get a showing,” explains Jessica. “Sometimes, we’d show up at 7 a.m. – and were ready to make an offer on the spot if we liked it.” 

Use your network

When Elizabeth and her husband Nathan were relocating their young family from Milwaukee back to their hometown of St. Paul, Minnesota, they found their new home by word of mouth. 

“My husband’s parents told his aunt we were moving back,” says Elizabeth. “His aunt then called her friend who had grown up in the area we wanted. The friend’s 91-year-old mother had just passed, and the family was in the process of putting the home up for sale. We wound up buying the house from the family before it even hit the market.” 

You never know where you might find a lead on a house, so tell anyone who’ll listen – your hairdresser, co-workers, dentist, etc.

Write a letter to the seller

It may sound silly, but pouring out your feelings about a house can be an effective tool to sway a sentimental seller to accept your offer. One of Diane’s buyers wrote a letter and offered $11,000 above the asking price. At the closing, the seller revealed that she had received better offers but the letter had won her over.

Keep an open mind

Blame it on HGTV, but many first-time homebuyers have unrealistic expectations for the perfect home. You don’t want to settle, but you may need to make realistic concessions. 

A “must have” for Jessica was a home with character. But when she and Brandon found a house that checked most of their boxes but lacked charm, she kept an open mind knowing Brandon’s father was handy and could add many of the architectural features she desired. Since moving in, her father-in-law has added crown molding, built a brick fireplace and helped remodel the kitchen. (Yeah…that’s pretty handy!) 

And poor Anna and Nathan? After taking a short break from house hunting, they came back refreshed and got lucky with Offer #14. Keeping an open mind worked in their favor, as Anna attributes their accepted offer to the fact that their soon-to-be new home was older and needed work so they didn’t face as much competition. 

One last bit of advice for stressed-out new homebuyers: Be patient and persistent. Even in a super tight housing market, eventually you will find your home. 

Arrowanah Babb

I had many of the same experiences. Being out bid, or being beat to the acceptance has been daunting. Finally, an acceptance. On the ONE.

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Julie Tramonte is a writer who joined MGIC in 2018. Prior to flying the coop, she wrote for a mattress company, a manufacturer and advertising agencies. She’s obsessed with reading, traveling, tennis and rearranging furniture. Mother of 2 beautiful, adult daughters. Empty nester toying with downsizing. Her guilty pleasures are doughnuts and the Kardashians (don’t tell anyone).