Navigating today’s competitive real estate maze | Real Estate

Happy spring. As many of you know, we are beginning the height of the proverbial “spring market” in residential real estate. Cleveland, even when there is snow on the ground, has a premature spring market, as things often start to heat up in late January and February.

What we are experiencing in the first few months of 2022 is unprecedented. Why? Prices are up a variety of percentages across the board in various communities. However, the overall inventory is at one of its lowest points and buyers are coming out of the woodwork in many price points.

Case in point: Recently in Lyndhurst, I had shown a home priced in the low $200,000s and was largely renovated. The buyers I am working with submitted a very healthy offer, which was $40,000 over listing price.

The listing agent responded that there were 57 offers – yes, 57 – and that the sellers chose one which was a higher figure and one that had an “appraisal gap and no inspection.”

My buyer also had very strong terms, but to compete with that many people is insanity. We will continue our search. However, the point of this column is to illustrate what is happening in our market as well as in many parts of the country.

What is new these days are these appraisal gaps. Your lender is the best one to speak to about this, but in most cases, if the home is sold for $450,000 and appraises for $425,000, which is happening on occasion with many over-asking bids, then you as the buyer are responsible for the “gap” or the difference, as the seller in most cases won’t reduce their price to accommodate, as they do not have to. There will be another buyer.

The lender may say you can pay a percentage of the gap, depending on the down payment you are investing in the property. As interest rates rise, this may dissipate somewhat, but appraisers can only look back as the market moves forward.

Another clause which is becoming popular, to the dismay of private inspectors and attorneys, is the removal of the inspection contingency. One must be secure in knowing what they are doing and possibly obtain a home warranty or an inspection for informational purposes to have knowledge about the property, but purchase largely “as is.” The option that some people are able to purchase with is cash. We are seeing numerous cash buyers as well, which effectively “knocks” out the average home buyer obtaining a mortgage.

If you are secure in obtaining your loan, you may wish to remove that financing condition, however discuss the risks with your Realtor and lender. For sellers and buyers, there is no better time to consult with a professional Realtor on these topics to gain better knowledge in navigating this highly competitive market. Nothing beats the experience of a seasoned professional.

Sharon Friedman is a broker associate with Berkshire Hathaway Home Services Professional Realty in Moreland Hills.

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