The housing market is rapidly rebalancing, but buyers and sellers are struggling to keep up with the changes. A new survey of real estate agents from Zillow reveals that the most common misconception among potential buyers is that home prices will crash, while sellers cling to outdated expectations of bidding wars and quick sales. Here are the misconceptions of home buyers and sellers in a changing residential real estate market, according to Zillow.
● According to real estate agents, the main misconception among aspiring home buyers is that house prices will drop significantly. Zillow research reveals that a rapid price decline is unlikely.
● Agents overwhelmingly claim that sellers continue to expect bidding wars, bids above asking price and quick sales, despite the market downturn.
● Survey finds first-time home buyers should first align financing and separate their wants from their needs before buying a home.
READ ALSO: Arizona #2 for Highest Home Price Appreciation
Nearly half of agents (46%) say the biggest misconception among aspiring home buyers is that home prices will drop significantly, while more than a third of agents (35%) say potential buyers mistakenly think they should wait for high mortgage rates to come down. .
“Buyers may think it’s best to wait for the market to end, but in reality there are more opportunities in this market than I’ve seen in the last five years if buyers approach the real estate as a long-term investment,” said Michael Perry, an agent who runs The Perry Group in Salt Lake City, Utah. “If prices or mortgage rates drop significantly, all of those sidelined buyers will likely come back into the market, driving up competition and prices. If the buyer can buy today, they have bargaining power, more options and more time to find the right home, instead of being rushed into a purchase, they could regret.”
Zillow research reveals that a rapid decline in home values is unlikely. Zillow’s home value provide predicts a flattening of home values over the next year, with prices rising 1.3% by September 2023. Fewer new listings will keep upward pressure on prices. Meanwhile, some housing economists believe that mortgage rates are more likely to rise than fall as inflationary pressures remain strong.
With mortgage rates volatile, 44% of agents say the most important step first-time home buyers can take is to secure financing before buying a home. Zillow’s affordability tools can help buyers understand how much home they can afford before get pre-approved for a mortgage. First-time home buyers also need to understand what they are willing to compromise on before purchasing a home. More than a quarter of agents (28%) say the biggest mistake first-time home buyers make is not separating their wants from their needs.
Buyers seem to be taking advantage of today’s more favorable market. Nearly 3 in 5 agents say buyers are taking longer to consider a home (56%) and are more likely to offer below list price (55%). More than 40% of agents say today’s buyers are including more contingencies in their offers (43%), such as inspection and appraisal. contingencies designed to protect buyers against unexpected costs.
Sellers, meanwhile, can cling to outdated expectations. A large majority of agents say it’s a common belief among sellers to expect multiple offers on their home (81%), above market value (79%), a quick sale (79%) and no need to lower their price (74%).
“Sellers can no longer put up a for sale sign outside their home and expect offers to flood in,” said Koby Sway, an agent for The Brily team in Omaha, Nebraska. “They have to roll up their sleeves and make the necessary repairs and improvements before putting their house up for sale. And getting the right price is more important than ever when you’re competing with other sellers for a smaller pool of buyers.
Nearly 3 in 4 agents say pricing a home correctly is the most important selling strategy (73%). Competitively priced listings are contracted in 19 days nationwide, 10 days faster than before the pandemic, while other houses linger in the market a median of 54 days. More than a quarter of sellers have been forced to lower the listing price of their home (28%), the highest share since 2018.