One question most buyers that have written a purchase agreement are asking these days is what is the offer response time from the sellers. The past few years when buyers were scarce, sellers were responding rather quickly if they got an offer but these days with so many buyers and showings sellers are not so apt to rush into anything. Normally the seller will get the buyers a response in about 24 hrs. Right now if there are a lot of showings they may hold off to see if they can get multiple offers. You can put a response time on your offer, but in that case you need to be ready to say forget that house and move on if the sellers choose not to respond in your time frame.
If you are looking at bank owned properties they often will wait days if not up to a week to see how many offers they can get. Generally at some point they will ask for the highest and best offer and then make a decision.
It may not seem fair to the buyers, but the sellers are in control right now with so many buyers and so few homes for sale. The best plan is to make a good solid first offer, be flexible if there are multiple offers, exercise patience and consult with your Realtor for your best plan of action.
What is shadow inventory? Shadow inventory is real estate properties that are either in foreclosure and have not yet been sold or homes that sellers are holding back on selling until the market improves. If all the shadow inventory were released at once the market would be flooded with homes and drive the market way down. According to Standard and Poor’s, it will take about 46 months to clear the current shadow inventory. Once the majority of these homes have been released the market can really begin to stabilize. Shadow inventory is always coming onto the market but for the first time since 2007, the rate has slowed in the first quarter of 2012.
According to the Minnesota Association of Realtors Minnesota home prices are increasing! As I have previously mentioned the supply of homes is down and the buyers are out in full force creating a multiple offer situation on many properties. These factors appear to be leading to a price increase in Minnesota. Home sales in March 2012 were up 7.5% from March 2011 and median price on closed sales was up 7.1%! Sales have been rising the past few months but this is the first significant price increase. We are not out of the woods yet as we are in the spring market which normally has the highest sales and prices have dropped much more than 7% since the housing crisis began but it is a positive sign!
It is pretty clear that we need to get the short sales and foreclosures off the market in order for real estate to rebound. The question is: are investors good for real estate? The past few months investors have purchased about 23% of the homes on the market. At first glance this is a good thing but the problem is that they are making more and more cash offers, actually about 74% are cash deals. Still wondering where the problem lies? The banks negotiating the short sales and foreclosures prefer the cash transactions over financed ones as they are a sure thing and quicker to close with financed buyers needing 30+ days to close. The cash buyers are also offering 10-20% less on the properties and the banks are still taking these cash offers over financed offers. What it all comes down to is that the cash investors are driving the low prices down even further and taking properties away from traditional financed buyers. You be the judge, is this a good or bad thing for the real estate market? Statistics from USA Today.