What is going on?
The real estate market is experiencing a type of Seller’s Market that is unheard of. Today, people are overspending due to negotiation wars between buyers. This level of competition for homes in Houston is new, and something all buyers must learn about and be willing to adapt to if they want to buy real estate now or in the next few months. What you can experience is shocking. You have homes with 20+ offers in the first 24 hours. Some homes are selling overnight and for over several thousand dollars of what the asking price was.
New construction builders have even stopped releasing new lots and most likely will not release them until September. They do not know how what the next couple month could change their pricing structure. All of this has left a low inventory of homes. Therefore, making many people fight over the same house. Furthermore, relocation buyers from states where you get very little for your money do not care about price. They are moving to a state where they will be receiving A LOT more homes for their money. They do not mind paying over asking without even visiting the home. It is safe to say that this market is insane.
What to Expect....
To prepare, make sure you have your Pre-Approval letter ready to go before you even think of viewing a house; it is possible that what you see one day is gone the next. This market is not about getting a good deal on your home. It is about how comfortable you are paying the full asking price and having cash if the home does not appraise near the sold value. Many buyers are even waiving their Appraisal Rights: which allows the buyer to terminate the contract if the appraisal comes in much lower than what they would be paying for the home.
Most importantly, be ready to act. I cannot stress this enough. If you are serious about buying a home right now, it is not the time to be complacent. Once that house is gone, it is gone. I will stress again, be ready to act.
How to Navigate This Market
At the moment, conventional real estate transactions DO NOT exist. If you are a buyer right now, you have to understand that just looking at comps and basing your prices on that is almost a guaranteed loss in what has pretty much become an auction when buying a home. Find an agent who is “in the trenches” every day, someone who can guide you and help you understand this market. Offers have to be approached with some finesse and not just numbers.
While this is a crazy time, it acts in cycles. Therefore, eventually, we will see a balance in the market (maybe by August or September) but, I would not expect prices to go down. Prices will keep increasing due to high appraisals that will come due to high selling prices. However, the price will increase at a much slower rate than we see now. My advice is if you can wait to buy, then wait. As much as other real estate agents and I would LOVE to sell you a home, you also should not be putting yourself into a financial crisis by overpaying for a home in an overvalued market. On that note, make sure you understand and plan your finances if you are serious about buying a home right now. Times will change, and it will get better. We have to have a little bit of patience.