Redfin agents report that buyers are having success with down payments below 20 percent despite intense competition and fast sales
SEATTLE--(BUSINESS WIRE)-- The greatest challenge for home sellers this year is finding another home to buy, according to a survey by Redfin (www.redfin.com), the next-generation real estate brokerage
In a March survey of more than 800 Redfin real estate agents, 65.6 percent said that low inventory was the greatest challenge for sellers in their markets.
"It's a seller's market, but the catch is, most sellers need to buy as well," said Eileen Lorway, a Redfin real estate agent in the Boston area. "This is a conversation I have with many clients at our first meeting. We discuss options like ‘seller to find suitable housing' contingencies for the sale contract, ‘purchase contingent on sale of current home' options for the buy offer, rental options, stay-with-family options and bridge loans. Sellers who are buying need to think outside the box a little bit. It's not easy, but we often do end up closing on sale and purchase on the same day."
"I also encourage sellers who are also buyers to think about selling first. They should consider temporary rental options, or moving in with relatives after they sell. Then they will be able to take the time they need to find their dream house, know exactly what they'll have to work with financially, and won't end up adding unnecessary contingencies to offers, which will give them a better chance to get the home," said Lorway.
Most agents reported that homes were selling faster than this time last year and that competition was more intense. Among respondents, 57.2 percent had already been involved in at least one instance of a home receiving 10 or more offers this year. And only 1.8 percent of agents had yet to be involved in a bidding war.
Despite Intense Competition, Buyers Are Having Success With Less than 20 Percent Down
Half of agents reported that the typical down payment for successful buyers in their market was less than 20 percent, meaning there are other ways to make an offer competitive, like working with a reputable local lender who can guarantee to the seller's agent that the loan will be approved quickly, and building a rapport with the seller.
"I recently had an FHA-backed offer with 3.5 percent down beat out four other offers, each of which had conventional 20-percent down loans," said Redfin real estate agent Tim Zielonka of Chicago. "The sellers were at the showing. I introduced them to the buyers and pointed out that both were huge enthusiasts of both vintage bicycles and classic cars, which put them at ease with one another and enabled them to form a natural connection. Had they not discovered this shared interest, my clients may not have gotten the property."
To read the full report, complete with more analysis, charts, detailed survey results and methodology, please visit: https://www.redfin.com/blog/2017/03/lack-of-homes-for-sale-is-a-problem-for-sellers-too.html
Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $40 billion in home sales through 2016.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, subscribe here. To view Redfin's press center, click here.
Redfin Journalist Services:
Alex Starace, 206-588-6863