Keep It Real: 8 home-buying tips in a hot seller’s market

This year is off to a scorching start for homesellers across the nation, including Hawaii.

Low interest rates and a supply shortage for single-family homes across Oahu are driving demand and pushing up prices. The median price on the island soared to a record $917,500 in February, up about 4% over the previous month and a stunning 20% from February 2020, according to the Honolulu Board of Realtors.

The fierce competition has forced buyers to submit aggressive offers with sky-high prices and favorable terms for sellers. Bidding wars are commonplace as roughly half of all Oahu houses sold above their asking price in February. Homes are being snapped up with just an average of nine days on market. Compare that with pre-pandemic February 2020 when homes took about four times longer (35 days) to go into escrow.

With just a little over a month of inventory of single-family homes on Oahu now, it has become an exceptionally strong seller’s market heading into the spring and peak summer home-buying seasons. So how do homebuyers compete?

Here are eight home- buying tips that might help you land that perfect home:

>> Assemble your dream team: Don’t do this alone. Putting together the right team of licensed professionals early will help you achieve your real estate goals and improve your home-buying experience. Communicate often with your real estate agent, loan officer, CPA, insurance agent and any other professionals to answer your questions, help you compete and navigate through the process. When your offer is accepted, have your contractors and professional home and termite inspectors ready to go, as inspection time frames are extremely tight in a seller’s market.

>> Get pre-approved: Figure out financing before stepping foot inside a home for sale. Some agents are even requiring buyers to provide pre-approvals to just see their listings. In a fast-moving market, be proactive. Don’t rush and scramble to get your credit and financing in order after finding something you like. Sellers want to see that the buyer’s financing is solid. Also, give your lender time. Appraisers are swamped with purchases and refinances, which is making appraisals take a bit longer. Lenders are also thorough in their reviews, looking for changes to income or debt during the pandemic. Being pre-approved will make you a stronger buyer, make the process a lot easier and avoid surprises and potential pitfalls down the road.

>> See it soon: Try to look at new listings as soon as available. Some sellers wait until after an open house before reviewing offers or selecting buyers. But some won’t and will act fast. So it’s always good to see it earlier than later.

>> Write a letter: With multiple offers to choose from and offer prices well above asking, some sellers might want to know more about why you want to buy their home. Having a letter to the seller written by your agent or yourself with some background could help tell a personal story that even the best purchase contract simply cannot do. For some sellers, price may be the lone consideration. But for others, they want to know their home is a going to the right buyer, especially if the seller has lived in the home awhile and has close ties with neighbors.

>> Favorable terms: In a multiple-offer situations, buyers are often offering favorable terms to sellers like shortening inspection periods, providing flexible leasebacks, adding escalation and appraisal clauses, paying for the termite inspection, etc. Figure out what is important to sellers. Discuss strategy with your agents and offer what you understand and feel comfortable with. A favorable term can be as simple as waiving professional cleaning, which would save the seller a few hundred dollars. It is highly recommended in most cases not to waive the professional inspection, which is happening more in other hot cities in California and Washington.

>> Expand your search: At some point you might have to consider upping your price and/or geographic range if you’re not willing to wait for homes in the price point or neighborhoods you want.

>> Avoid the noise: A real estate expert was quoted on local TV news last summer with a startling prediction that home prices in Hawaii would decline 15% to 25% because of high unemployment. Home prices were at a median $770,000 back then and are up 17.5% since. From friends, family members and co-workers, it seems everyone has an opinion on real estate prices. “Expert” predictions in real estate have been as reliable as picking winners in this year’s March Madness bracket. The fact is we’ve never gone through something like COVID-19 in our lifetime. And no one — including experts and real estate agents — can say for certain where the market is heading.

>> Be patient: If you forget any of the seven tips above, just remember this one. Be patient whether you are submitting your first offer or fifth. There’s a saying: “All things are difficult before they become easy.”

Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com