Houses sold quickly in 2020, keeping inventory low. And multiple offers and bidding wars seemed to be the rule rather than the exception. A roundup of expert opinions in a recent Forbes article agrees that this trend will continue in 2021.
The Buyer’s View: Buyers need to be ready for competition once they find a house they like and get pre-approved for financing before they even start to look. Higher prices overall might prevent first-time-buyers from getting that starter home. Buyers need to beware of getting caught up in a bidding war and paying more than a house is worth. With low inventory, they may need to reevaluate their list of must-haves, keep expectations realistic, and be ready to compromise.
When there are multiple offers, it’s helpful if buyers are willing to waive some contingencies. A large down payment or if possible, paying cash can help sweeten the deal too.
The Seller’s View: Homeowners who spent 2020 debating whether or not to put their house on the market might find 2021 the time to go for it. They will still need to do the usual things to get their house ready, such as making repairs and updating.
A seller’s market is great for finding a buyer or even getting multiple offers, but there’s a downside too. Sellers will find themselves facing the same lack of inventory when they look for their new home. Good timing will be important, as will finding the best offer. That may not be the highest dollar amount, but the deal that will close quickly and smoothly.
The Real Estate Agent’s View: Inventory will remain tight, but the market could get a boost from three sources: homeowners who have to move due to some of the circumstances we mentioned above, those who held back selling in 2020 but are now ready to go, and new construction. New construction is on trend to grow. The only wrinkles that might affect the new construction market are the higher cost and scarcity of building materials, and a possible labor shortage. As long as builders can overcome those obstacles, there should be plenty of new homes for sale.
While higher sales prices mean good commissions, getting to closing will take a lot of work for agents. Multiple offers could see clients missing out on a home and going back to square-one. But this is where the go-getters can shine: Finding solutions for clients and putting negotiating skills to good use.
One thing that will most likely impact buyers, sellers, and real estate agents in 2021 is a longer-than-normal wait for closing. The busy market and continuing low interest rates have lenders swamped in 2020. It will take some time for them to catch up with the backlog.