Austin's Sellers Market
What does Austin’s seller’s market mean to a buyer?
Austin is currently a “seller’s market”. What does that mean? A seller’s market is one in which there are more buyers than properties for sale. A buyer’s market is when there are many sellers and few buyers, which leads to lower prices but also slower appreciation. So, what exactly does a seller’s market mean to a buyer?
If you’ve talked to somebody who has bought a house in Austin within the last few years, they may tell you that they won a bidding war to get their home. It’s true that many Austin properties will have multiple offers and that can sound intimidating to a first time buyer. Yet, keep in mind that most of your competition has not taken the time to educate themselves. Doing your research will keep you one step ahead of the game. But you clearly know that because here you are!
In order to get ahead of your competition, you should start thinking like the seller and their agent. Ultimately what do all parties want? To get to closing with nothing going wrong along the way! Let’s say that you and your competition make identical offers on a home. The seller will then need to pick the most qualified buyer. How is this determined? First of all they will look at your lender. Do they have a good reputation? Do they make false promises? For example…closing when they say they will? Next they may compare your down payment amounts. Are you putting down 7% while your competition is putting down 20%? They may choose your competition. Cash is king and a 20% buyer may be able to make up for an appraisal issue if it comes down to it.
Don’t let housing gossip about over asking prices scare you off. Prices may be rising but people aren’t blindly make offers. Ask your agent to send you the past sales in the neighborhood and how long they were on the market. Together you can come up with a offer price that makes sense to you and that accurately reflects the market activity.
Do you have an extra long laundry list of deal breakers that your future home must have? Unfortunately you may be looking for a long time. The best way to come up with the perfect plan for finding a home in Austin, is browsing through the inventory. Go look at a few homes with your Realtor and you’ll start getting an idea of what’s realistic to your situation. You may realize you don’t necessarily need everything on your list or you may decide to extend your lease in case your dream home ever decides to hit the market. The key to buying in a seller’s market is flexibility. Keep your options open.
There are cons for the seller in a sellers market? If you’ve done any research about buying a house in Austin, you may get the impression that homes are flying right off the market! You hear It takes only a day or two to sell your house. Well, what if you’re a seller and your home is still on the market after a few weeks? Home buyers get scared away! They may think there is something wrong with the house. If a house is sitting for longer than two weeks and it seems to fit your criteria, ask your Realtor for more information. Maybe the house had a buyer fall through and they had to put it back on the market. Or maybe a few weeks is the standard time for a home in that neighborhood to stay on the market. You never know until you ask.
Con number two: In a competitive and fast paced sellers market, some buyers are realizing they may need to settle with their second choice home. They make an offer and are pretty content. What if soon after going under contract, they find out their first choice is now an option? They will probably go with their first choice and the seller will still have a house to sell! A buyer who is looking during a sellers market tends to be less emotional about the process than when looking during a buyers market.
Perception and conventional wisdom are sometimes far from reality. You need to look at the data available to you when wanting to understand the current Austin market. Only then can you make an educated guess about what the market may do. I often tell people, buying a home is not for everyone, there’s freedom but also risk. What’s best for you? If you’d like more information, I wrote an article that goes over a “buy vs rent” calculation and another post that will explain the best way to make an offer in Austin’s market. Good luck and reach out to me with any real estate related questions! I’d love to help.