Fierce Competition Makes Home Buyers More Flexible

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By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

competition graphicAs we kick off 2014, it’s already abundantly clear that in many places it’s a seller’s market out there.

Even more evidence to prop up this argument has cropped up in the last week as a survey conducted by Redfin found that more buyers are realizing they have to compromise more in order to get the home they want.

By compromise, they mean pay more and accept less.

The Redfin survey revealed that 35% of real estate agents said that buyers are now “willing to pay more” to find a home compared to last summer. An additional 30% of agents said that buyers are more flexible about must-have features and lowering their expectations of what their money can buy.

Good news for sellers, right?

Yes and no.

Even as home buyers are putting their expectations more in line with market realities, the agent survey found that many sellers are not, with 63% of agents saying that sellers’ expectations about the value of their home was unrealistic.

Also, given that most sellers are also buyers, they too are experiencing the same angst over lack of inventory and rising prices.

Sure, it’s a good time to sell. It’s a great time to sell around here! But the number of agents who agree dropped in the second half of 2013, according to Redfin’s survey. While 93% of agents surveyed in Q2 last year said it was a good time to sell, by Q4 that number had dropped to 65%. How could that be?

Some seasonal factors were at play here for sure. But many also are likely worried that limited inventory and the increased competition it has brought with it have priced out a lot of buyers and will continue to price out more buyers in 2014 – especially if interest rates cross above 5.5% on a 30-year fixed-rate mortgage.

That will create more challenges for sellers through the year.

Among the most common challenges agents cited for buyers at the close of 2013 were low inventory (top of the list), multiple offers, fatigue, rising prices and rising interest rates.

We continue to hold that all local markets are different. Today may be a fantastic time to sell or buy in your neighborhood – depending on your own motivations and circumstances.

We love to follow stuff like this, but always like to keep that in mind. All real estate is truly local and truly personalized to the buyer and seller at hand.

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