Just as the California Gold Rush was spurred by a discovery, the recent “Home Rush” was too. Only this time, it wasn’t the prospect of gold that lured people – but a different golden opportunity: The prospect of homeownership.
Fueled largely by the COVID 19 pandemic, people fled crowded cities and dense living situations for the safety and ability to isolate that homes offered. Buyers were driven by a desire for larger homes in the suburbs, with separate spaces for working and schooling their children.
According to the National Association of Realtors (NAR), the pandemic-driven demand sent total home sales in 2020 to the highest level since 2006.Total year-end sales volume ended at 5.64 million units, far better than predicted before the pandemic.
But even the most eager homebuyers were bumping into barriers: Record low supply and record high prices limited the exceptionally high demand.The housing market quickly became red-hot and fiercely competitive. Bidding wars ran rampant and houses went for far more than the asking price. In December of 2020, homes sold in an average of just 21 days. Such activity is unusual at that time of year, according to Lawrence Yun, chief economist for NAR, who says that every year during the holiday season they normally see the number of days a house is on the market increase.
Yun says mortgage rates should remain very low throughout 2021, although we may have seen the lowest already. Homes continue to fetch top dollar this year, still selling like hotcakes.
Going To Extremes
Potential homebuyers are resorting to all kinds of extreme measures in their quest for keys, including getting pre approved and pre qualified, not just and making all-cash offers.
Some buyers are even making the unwise decision to forgo getting a home inspection in order to get a hotly-coveted house – huge risk, for a number of reasons.
For first time buyers, a home inspection may seem like an unnecessary cost. But experienced buyers know how important it is to have one. It can stop you from making a costly mistake. Investing in a home will likely be the most expensive purchase you will ever make in your life. Would you put your money into some other investment, such as a pension plan without having checked it out? Of course not.
Many houses may appear to be in great condition to an untrained eye. But it’s possible a fair percentage can actually have serious defects. The kind of things that can end up costing thousands of dollars to fix.
A good number of sellers never do anything to get their property ready for an inspection, including skipping fixing obvious defects. Not preparing for a buyer’s home inspection is pretty fool hardy. Any real estate agent will tell you it’s a significant hurdle to clear in any home sale.
Waive Your Money Goodbye
In a strong seller’s market the temptation to forgo a home inspection is very real. By waiving one, you’ll make your offer look stronger to a seller. And it’s easy to become desperate and start making hasty decisions after you’ve lost out on a number of homes you really wanted to buy.
In fact, waiving a home inspection has actually become common in many cities and towns. But is it a smart move?
Contingency And Honesty
Most real estate contracts will give you a due diligence period that lasts seven to ten days, typically with a contingency for home inspections. This will allow you to get out of the contract if you find serious structural, mechanical or safety defects.
Not all sellers are honest with you or their Real Estate agent. They may have the best HVAC system available, but is it working efficiently? An experienced home inspector will check. Not only that, all qualified home inspectors will also check that maintenance schedules are up to date.
A home inspection will also include many things you wouldn’t know how to check and other things you wouldn’t try to research. Even if you have experience in home buying, you should always make sure a home inspection happens.
In some states sellers do not have to disclose any problems with their homes. Non-disclosure is known as Caveat Emptor or “let the buyer beware”. Again, another reason why waiving your rights to check out the property could be a significant home inspection mistake.
You’ll also be able to re-negotiate with the seller if necessary, if you encounter any “inspection deal breakers”. If the home needs a lot of work, and you’re not sure how much it’s going to cost, it’s always a good idea to pass. Dampness which has caused mold, significant settling, and roof replacement are some of the red flags which make most buyers turn their backs on a property.
Also if you are purchasing an older home, look out for asbestos. It’s still found in older style properties. Sadly, many homeowners don’t know that it’s there.
Mid America Mortgage understands that every borrower is different and we are committed to helping you find the right mortgage loan. Give us a call and we’ll happily help you purchase your single, largest investment ever.