Brisk Housing Sales Putting Pressure On Twin Cities Sellers
BROOKLYN PARK, Minn. (WCCO) -- If you're in the market for a starter home -- something in the $150,000 to $250,000 price range -- be prepared for some competition.
Many sellers say they're being barraged by multiple offers, that at times can lead to purchase agreements that are at or above their original asking price.
Continued low interest rates in the 3.5-percent range combined with an abnormally tight supply of homes is fueling the red-hot real estate market in the Twin Cities. According to recent figures, demand for homes under a $250,000 is at a 10-year high.
Derek Volz and his wife didn't even have their Crystal home on the market for two weeks. To their pleasant surprise, a top offer came in before the for sale sign was even planted in their front yard.
"We weren't really prepared, but it was a good price, so we took it," Volz said.
It's happening a lot around the metro as buyers are snapping up beginner homes in big numbers. The brisk sales pace is why some sellers are doing what's known as a "reverse contingency" on the purchase agreement. Such an agreement makes the sale contingent on a seller finding a new home within a certain time period.
"They listed a house at 9 a.m. and by noon they already had four showings on it," said Chris Galler, who heads the Minnesota Association of Realtors.
Galler adds that the present inventory of homes for sale is one-half to one-third what it should be. In March there was only a 2.3 month supply of houses on the market.
"For sellers, they want to move up but are real unsure about being able to find a house to satisfy their needs because there's not much for them to look at," Galler said
Brooklyn Park realtor Tom Walter, has been in the business more than 40 years. He says with homes selling so quickly, some sellers want contingencies so they're not left homeless.
"They don't want to sell before they buy so they make it contingent," he said. "[A buyer] might give them three weeks to look for a home of their choice and if they can't find one they have a right to cancel the sale."
So buyers should come with financing pre-approved and be prepared to up an offer. For Derek Volz and his wife, they'll have two months to find a new home.
"We weren't even thinking about selling, came by surprise," Volz said.
"It's one of those markets where it's good for both sides - you don't see that very often," Walters added.