The pandemic-fed real estate market has been hot. Houses are selling for more money and with multiple offers. Market time is down too. It’s not uncommon for homes to sell off the private listing network before they even officially hit the market. All of this makes for ideal conditions for one half of the equation — the sellers. For the buyers, the current market can be full of frustration and heartache.
Real estate broker Deborah Wess, with Coldwell Banker Residential Brokerage in Oak Park, says she’s seen it time and time again with her clients. It can take multiple offers on multiple homes before they finally have an offer accepted. She says it has changed the entire process of helping clients find a new place to call home.
Wess’ client, Sam Ageloff and his wife, are relocating to Oak Park from Michigan, and he says the process has been fraught.
“We were prepared for the Oak Park market to be competitive,” Ageloff said. “We weren’t prepared for the amount of aggression we saw.”
One evidence of that furor was other buyers all making cash offers and offering well above asking price to secure a contract.
Wess says the speed of the process has also changed.
“We tell buyers they have to be ready to make a decision after seeing a house once,” Wess said.
Sometimes, even one in-person viewing isn’t possible. Wess recounted the experience of out-of-state clients who travelled from California to spend a week finding a new home in Illinois.
“We weren’t successful with what they saw in person, so now I’m shooting video for them,” Wess said.
Some sellers are wary of out-of-state buyers who can’t see a house in person because of concerns that someone who hasn’t seen a house in person is more likely to back out of a transaction later in the process. Wess says part of her job has become to convince sellers that her clients will not back out of an offer.
Wess has come up with strategies that can make sellers take her buyers seriously. These include offering more earnest money with the signed contract or offering money over the asking price.
Ageloff says that in order to get a house, he and his wife lowered their price range so that they could be comfortable offering more than asking price, and they offered more earnest money to show they were serious even though they were coming from out of state. Their third offer won out over 12 others, and the family is looking forward to moving to Oak Park this summer.
Wess notes that in other parts of the country, buyers’ agents are waiving their right to inspection to seal the deal, but she says she doesn’t see that happening here where the older housing stock typically comes with more issues for an inspector to discover.
“I always encourage inspections, at least for informational purposes,” Wess said. “You might tell the seller you won’t ask for credits, but don’t waive that inspection.”
Steve Scheuring of Compass says the current market is the worst for buyers that he can remember. He says that much of this is due to lack of inventory and points out that a recent search of single-family homes on the market in Oak Park in the $300,000 to $700,000 price range yielded only 30 homes. Of those 30, only seven were new to the market.
Wess says that a recent Tuesday was host to only seven brokers’ open houses, when at this time of year, there would typically be 20 to 25 every week. She says this is a reflection of how low the inventory is. Sellers and brokers no longer see the point of doing open houses when they know a house will sell in two days.
Both Scheuring and Wess say they haven’t seen a large drop-off in activity with rising mortgage interest rates. Both point to a number of factors feeding the flames of the local market — the pandemic making older housing stock with more rooms and bigger yards more desirable, millennials hitting the age when they want to become home owners and sellers who might be ready to downsize not doing so because of the lack of inventory for another home.
Scheuring says that at the end of the day, buyers who need to buy do so for “normal life reasons,” because they are relocating, have a new job or are growing their family.
He’s seen tactics that can fuel the fire of buyer stress. Selling agents often hold an open house within days of listing a property and ask for best and final offers shortly thereafter.
Scheuring says that while it can be fair to let all interested buyers to make an offer, setting the expectation that best and final offers will be expected at a certain time, even if there are no offers yet, can create a frenzy that leads to buyers offering above asking price.
He says bidding over the asking price can lead to remorse or to paying more than a house is worth. When he uses the best and final offer strategy, he asks for offers by Sunday at 5 p.m. and then tells potential buyers they will hear from him by noon on Tuesday, which allows them time to think about their offer before he goes into the MLS and changes the home’s status from available to under contract.
Even in this busy atmosphere, market time matters according to Scheuring.
“In Oak Park, going under contract and then falling out of bed is the worst,” he said.
Both Wess and Scheuring state that the market is stressful for buyers and say it is hard to tell when it will mellow.
“Since the beginning of the pandemic, there’s only been one market: the pandemic market,” Scheuring said. “It changes every day. In a local market, you should be able to predict the next five to seven months. In this market, we’re keeping it to about three weeks.”