The unusual crisis created by the coronavirus pandemic impacts the economy sectors quite differently when compared to issues that have generated recessions throughout history. Although the realty industry has usually reacted with a delay of around 6 months compared to other areas of the economy, now it has reacted a lot faster, due to the depth, expansion and unpredictability of this crisis. But what might the return normal look like in real estate?
During the past century, crises such as pandemics and epidemics, followed by an economic slowdown, have had an almost instant impact on commercial real estate prices, but quite a small impact on trading activity – e.g. the Asian flu of 1957, the terrorist attacks of September 11, 2001, the SARS epidemic of 2002 and the financial crisis of 2008 – 2009. The real estate sector recovered the losses caused by these events at different rates. Recovery took place faster after one-off events, while long-term issues, such as the 2008 recession, led to a longer recovery.
Any crisis involves three stages: the first is the reaction or response period, in which one tries to understand the implications and limits the immediate effects; then comes the realignment stage, where new business approaches start to be applied; and finally, the period of growth, in which, starting from the newly developed strategies, we come to see new development opportunities.
The real estate market is currently hot and, in this context, if you want to win a contract, you will have to adapt to new situations.
First, players in the real estate field need a structured and efficient plan for the return of people to offices and other working spaces after the end of restrictions. Clearly, coming back to the physical work space does not necessarily mean returning “normal” as we knew it before the pandemic. Therefore, businesses need to consider the new ways people interact and adapt spaces accordingly.
How to win a bidding war?
Winning a contract in a hot real estate market is difficult. Housing prices are high and there is a significant imbalance between housing demands and available supply. Interest rates are historically low, people can now afford bigger homes and they hunt for them. Southlands homes for sale often have multiple offers these days, which means that you will have to really show that you can close the deal to be able to win a bidding war.
For this, you should get preapproved for a mortgage. Having a letter from your lender stating that your application has been underwritten and it is pending appraisal is a good way to increase your chances to win over other buyers.
Another tip you can use is to pay cash – if you can afford it. Many sellers will prefer cash over a loan, although if the offer doesn’t seem fair for them, they might still turn to a loan offer that has a better price.
Finally yet importantly, make your first offer the best one, because you may not get the chance to negotiate.