Home sellers have the upper hand in today’s market, and higher prices aren’t all they’re commanding. Buyers are forced to make increasing sacrifices in hopes of landing a new home.
“In this strong seller’s market, sellers are drunk with power,” says Holden Lewis, NerdWallet’s home expert. “They know in this competitive landscape they can force buyers to flatter them and give up protective contingencies. It happens when a house attracts multiple offers and buyers have to stand out from the crowd.”
Here are some common things buyers today can expect to encounter, or hoops they might have to jump through.
Surveillance cameras at an open house
It’s not unheard of for a seller to put home security cameras to use during an open house, and a good number of Americans think it’s perfectly fine. A recent NerdWallet survey, conducted online by The Harris Poll, found that 90% of Americans think it would be helpful for a home seller to put up such cameras for buyer showings. And more than one-fourth (26%) say such footage would be helpful to get a better idea of who the home buyers are prior to accepting an offer.
Depending on how the footage is used, it could teeter on discrimination. But 36% say it’d be helpful just to get feedback on the home.
Higher earnest deposits
Earnest money is a sum buyers put up as a show of good faith — if they walk away from the sale for reasons that aren’t spelled out in the contract, that money goes to the seller. In a seller’s market, the amount sellers ask for can trend higher, requiring potential home buyers to dig deeper into their pockets.
Personalized offer letters are common, in which buyers tell the current homeowner why their offer should be considered above all others. Some such letters include family photos and other details that scream, “Like me!” Money talks, but likeability could make one offer stand out.
Traditional buyers, with a lender’s preapproval letter in hand, might be competing today with more all-cash buyers. The historic average rate of all-cash buyers is 10%, according to Freddie Mac. This rate peaked at 35% during the housing crisis. In 2017, it fell to 21%, according to the National Association of Realtors. Though no longer dramatically high, buyers now are far more likely to compete with investors and other cash buyers than they were before the crisis.
An offer that isn’t contingent on the positive outcomes of a home inspection or appraisal, or on the sale of a buyer’s current home, may be more attractive to sellers. These contingencies are typically written into contracts to protect buyers’ interests, but leaving out the protections could entice sellers who want a smooth transaction.
“You know, it’s hard out here for a home buyer,” Lewis says. “Eventually the power imbalance between sellers and buyers will lessen. Until then, buyers will have to swallow the indignities of the homebuying process and have persistence, knowing that they might have to make a few offers before finally snagging a home.”
For additional data and survey methodology, please contact Maitri Jani at [email protected].