If you’re thinking of buying a home in Fairfield CT or the surrounding area, here’s how to create a bid that puts you ahead of the competition.
When March 2020 COVID-related closures were first announced, many predicted a massive slowdown in the Fairfield CT real estate market and beyond. Instead, the last year has brought unprecedented demand, driven by a variety of personal, professional, and economic factors. If you’re interested in buying a home this year, it’s important for you to understand current market conditions so that you can successfully navigate them.
Fairfield CT Real Estate Market Report: Q1 2021
Fairfield CT real estate agents who have been in the business for decades will tell you they have never experienced a market like this one. Of course, we have also never experienced a pandemic of global proportions, but what else explains the current wild market conditions with multiple offers, homes selling in days, historic low inventory, more frequent cash offers, and record-high home prices?
The current high demand for new homes can be attributed to a number of factors, including:
● Record-low interest rates put in place at the beginning of the pandemic to juice the economy, keeping it from stagnating and fighting inflation.
● Record high savings due to the effects of both the stimulus package and the lack of outlets for disposable income. As folks stayed home, they saved money on vacations, dinners out, and shopping trips — and they put that money in the bank.
● Increasing work-from-home (WFH) opportunities as companies shifted from WFH as a temporary solution to pandemic-related shutdowns, viewing it as a way to lower costs and increase the pool of qualified talent permanently. This resulted in the need for larger homes with multiple workspaces and the desire for skilled workers to move to more affordable markets since commute time was no longer a primary driver of decision-making.
● Demographic shifts as more Millennials decide it’s time to purchase their first home or move up to a larger family home.
● Familiarity fatigue as both renters and homeowners lived round-the-clock in their current homes and found out how many things they disliked about their existing space.
Lack of Supply
Lack of supply, in large part, boils down to a combination of low inventory — which was already a factor in many markets prior to the pandemic — interruptions to new construction brought about by both shutdowns and supply chain interruptions, and the reluctance of homeowners to sell their current home and face the difficulties of finding a new home in a seller’s market.
4 Key tips to win your offer in a seller’s market
Given these factors, it is clear that the current seller’s market is a case of simple, but frustrating, supply and demand. That means that it’s more important than ever for you to craft a smart strategy before you embark on your home buying journey.
1. Know what to expect.
It’s important to understand the way that homes roll out in the current market and to realize that you will, almost certainly, be competing against other homebuyers in a multiple offer situation.
Right now, most homes come on the market during the week as “Coming Soon” pre-listings, then go active on Friday for showings on Friday, Saturday, and Sunday. The best and final offer, then, is usually due to the listing agent Sunday night or Monday.
Most homes accommodate buyer tours in 15-minute intervals throughout the day. Many homes are selling for well over list price, so it is important for you to be prepared and have a sense of your best possible offer from the start.
2. Have your finances in order so you can be flexible.
Cash purchases offer a winning strategy in many, though not all, real estate offers. Be flexible with your loan options and consider ways that you can optimize your overall offer by focusing on the seller’s overall goal.
Talk to your loan officer and ensure that you are pre-approved and able to provide assurance to the seller of a strong financial position. Maximize your Earnest Money Deposit (EMD) and down payment to further strengthen your offer.
3. Understand what goes into a winning real estate offer.
You will need to be flexible in all areas of your offer in order to maximize your odds of success. The four items that sellers generally focus on are the following:
You will work with your real estate professional to craft a price that is in line not only with comparables in the area but also with current market conditions. By keeping their pulse on the market, your agent or broker will know what price is reasonable as well as what escalations may be necessary in order to win in a bidding war.
The home inspection and mortgage contingency are customary in a home purchase. While we advise you to retain the right to a home inspection, be prepared — you may have little or no bargaining power when it comes to repairs that are identified by the inspector.
While a mortgage or financing contingency would be appropriate in most circumstances, in the current market some sellers are releasing the mortgage contingency in order to compete with cash offers. This means risking your EMD if you are unable to qualify for a loan, though the risk of this is low if you have already been pre-approved by your lender.
As with all of your financial options, talk with your lender to determine whether you are comfortable proceeding without a mortgage contingency.
Be flexible with the date of closing and emphasize your willingness to work with the sellers according to their timeline. Remember that many sellers are contending with the same market conditions that you are experiencing and finding it difficult to secure a contract on their next home.
If possible, offer to allow a rent back to the sellers in order to give them more time to find their next home. While this is not practical for every buyer, if it works for you, consider it as an option to sweeten your offer.
If you have the funds available, consider a larger than usual EMD to reassure the sellers of your commitment to the purchase process. Remember that these funds will go into escrow and will become part of your down payment at closing.
4. Work with a trusted LOCAL real estate agent and loan officer.
Your agent is the best source of information about the Fairfield CT real estate market, including home prices, days on market, and other pertinent facts. Your agent or broker is your key source of guidance throughout the offer, inspection, negotiation, and closing processes.
If you are looking for a local loan officer, talk to your real estate agent or broker and let them draw on their professional network to find the best lender for your particular situation. They will be happy to refer you to someone who can reassure the listing agent as to your solid financials in order to give you the best chance at making a deal on your new home in Fairfield CT.
Most importantly of all, in a market like this you will need to keep your emotions out of the negotiations. If you lose one offer, rest assured that other homes will come on the market. You’ll need patience and flexibility and the ability to weather temporary setbacks in favor of a long-term view of success.