Buying an entry-level home in Arlington can be a tough nut to crack. Single Family Homes in the $500k-$750k range sell very quickly, usually for full asking price. On top of that, this segment of the market has experienced a chronic inventory shortage over the past five years as demand continues to outpace supply.
So, the average buyer is dealing with two major problems:
- Fierce Competition
- Low Inventory
Here’s a plan for how to deal with each of these obstacles.
#1 – Fierce Competition: Position Yourself Ahead of other Buyers
Before you put an offer on a home, you should have all your ducks in a row. This means getting a Pre-Approval letter from a reputable lender. Realtors know which lenders are reputable, and which ones aren’t, so do some research before choosing a lender.
In addition to a Pre-Approval letter, you need to decide how much of a down-payment you’re willing to put down. A larger down payment gives you a stronger position over other potential buyers, and can make the difference if there are multiple offers on the same property.
Once you’ve pre-approved, find a good Realtor®: Someone who understands the Arlington market, and has a strong grasp of what you’re looking for in a home. In this price range, homes will go from ‘Just Listed’ to ‘Under Contract’ quickly—Sometimes in less than a day. That means both you and your Realtor® need to stay on top of the new listings, and be ready with an offer immediately when you find the home you want.
Special Considerations: In this market, there are a few additional things you can add to your offer to sweeten the pot:
1) An Escalation Clause— Simply put, an Escalation Clause would state something along the lines of: ‘The Buyer agrees to pay $1,000 more than the highest offer received by the seller, not to exceed a sales price of $675,000.” In a case of multiple offers, this can help position you above other buyers. It also allows you to set a cap for how high you’re willing to go on a particular home.
2) Waive Home Inspection Contingency: Some buyers are offering to waive the home and radon inspections, or to conduct them for informational purposes only, as a way to entice home sellers to accept their offer. However, unless you know that the home is a fixer-upper, and you will have to make repairs anyway, this is a huge risk. I would advise against it in most cases.
#2 – Low Inventory: Stay on Top of the Market
This is where a good Realtor® comes into play. Your agent should have a detailed understanding of what you’re looking for in a home:
- square footage
- # of bedrooms & bathrooms
- architectural style
A good Realtor® will provide you with regular updates about new listings that fit your criteria. Check them out quickly, and walk any that interest you as soon as possible. You need to be ready to make an offer immediately if you find the right home.
Patience is important in this kind of seller’s market. You may put offers on several homes before one is accepted, but you have to be willing to play the game to win.
Consider Ugly Ducklings
This is something most buyers overlook, but as a builder, it’s always the first thing I see when I walk a property! Ugly Ducklings are homes that are overpriced and in substandard condition. There are always a decent number of ugly ducklings on the market in Arlington, and they tend to linger on the market for long periods of time.
If you keep making offers on homes and getting beaten out by other buyers, or simply can’t find the right home for you, it could be time to consider looking at the ugly ducklings. Once again, a good Realtor® will prove invaluable in this situation. They can offer insights on how much it might cost to fix up an ugly duckling, how much to offer the seller, and can help negotiate the details.
Buying a home in a tight seller’s market like Arlington can be a challenge. But with the right plan and the right Realtor®, your chances of success are very good!
Till Next Time,