A year ago, real estate professionals were asked to predict how the pandemic would affect home sales. Almost all those surveyed agreed that the market would see a dramatic drop during the looming shutdowns and economic distress. But hindsight is… well, you know.
Oklahoma real estate sales were shockingly robust throughout 2020. In fact, pending sales and average home sale prices in January 2021 soared about 25% higher than the same month the prior year.
What has sparked the home-buying bug? Whatever the answer, we certainly won’t ask those “professionals” again. The average sale price increase can be explained through the classic law of supply and demand.
People are buying, and new inventory is scarce. Soaring lumber prices (caused by increased demand for DIY home projects and mill shutdowns) has resulted in a dramatic decrease in new home starts. This in turn has placed increased pressure on the existing home sale inventory. Increased demand, lower supply and historically low mortgage interest rates have created the perfect storm for sellers.
Given these conditions, you may be considering selling your home. If so, there are a couple of new variants (sorry) to the sales process you may want to consider:
First, the hot market means you may be pleasantly surprised by your home’s current value. This can lead to the temptation to “test the market” and potentially overprice your home. But alas, the fundamentals of real estate remain intact, and an overpriced property will miss the excitement the market has for a new listing. Lack of interest necessitates a price drop which means lost time and possibly lost value. A properly priced home is more likely to receive multiple offers which allows the seller to maintain the upper-hand.
Second, it is important to understand the possibility for a contract price to exceed the buyer’s loan appraisal for your property. Appraisals can only use past data to consider home values. So, if your home is selling considerably above what comparable homes have sold for in the past, the new buyer may run into financing problems. While you can’t entirely inoculate yourself from this possibility, there are strategies that can be put in place.
Trust Company of Oklahoma’s Real Estate Department can help you formulate a strategic plan for selling your home. Contact us for guidance in navigating this unique and generous market.