New Survey From Opendoor Reveals Interesting Trends—Guess What Groups are Getting Competitive
If you are planning to buy or sell an investment property, dealing with market conditions is crucial. Do you expect a bidding war? Do you need to pay cash to win? What concessions might you need to make to buyers?
There is no way to answer all of these questions with certainty, but A.J New survey from Opendoor Offer some ideas.
Here’s what to consider as you prepare to buy or sell a property in the current market.
Buyers are willing to be competitive
The vast majority of buyers expect to see a bidding war when they go to buy a home. Millennials and Generation Z, in particular, see bidding wars in their future at rates of 76% and 73%, respectively. It is unlikely to expect much competition when buying a home.
However, this does not mean that you can price your property exorbitantly. Nearly 70% of buyers say home prices are currently unaffordable, and 72% say affordability is their biggest concern when buying a home. So much so that 73% of buyers intend to bid below the asking price. The intention to bid lower is higher with Baby Boomers and Gen Xers.
“Baby Boomer buyers are looking for bargains,” writes Amita Amora, Vice President of Investments at Opendoor. “About 80% say they intend to place an offer on a home at or below asking price, and only 14% would like to place a higher bid.”
Speed and certainty are most important to sellers
If you are buying property, offering the seller speed and certainty can give you the upper hand. Nearly nine in 10 sellers say making sure an offer isn’t accepted is “very” important to them, and another 58% say Cash offers a task.
“With many buyers facing financing challenges and looking for a better deal, the rate of contract cancellations has increased exponentially,” Amora wrote. Today, 18% of home sales are declining – the second highest percentage since 2014.
About three in four sellers are looking to sell their homes ASAP, so getting your mortgage pre-approved, having your documentation ready, and being quick with inspections and repair requests can help (cash offers can help even more, though).
Finally, be selective about any demands in the negotiation. Sellers are the most willing to negotiate a closing date and asking price, and 42% are willing to cover the inspection fee. They are not amenable to paying for home warranties, assisting with closing costs, or offering repair credits.
Disconnect
Buyers and sellers aren’t exactly compatible in today’s market, and this can make it difficult for both sides of the transaction. If you are on the selling side, be reasonable about your price list and be willing to negotiate. Don’t expect many asking bids, and with older buyers, be prepared to play hardball. Newborns are less likely to expect a bidding war or bidding on the asking price.
If you’re in the market for a new property, make sure your offers are as clean as possible. Keep your ducks running financially (or make a cash bid), and be careful what you ask for in negotiations. Some compromises are more likely than others.
As Amora writes, “The good news is that both potential sellers (76%) and buyers (80%) indicate their willingness to make compromises to speed up this process.”
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Note by BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.