The U.S. is currently in one of the most competitive housing markets in decades — and buyers know it. With interest rates rising as fast as prices, 88% of recent buyers said that the market had affected their home-buying plans, with 38% saying they increased their budget, and 36% fast-tracking their plans.
So how did successful buyers manage to come out on top?
A new study by Anytime Estimate surveyed 1,000 recent buyers to learn about the strategies they used to succeed in their home search. The study’s findings paint a picture of a highly competitive market where sellers and repeat buyers have distinct advantages — and first-time buyers are left to scramble.
However, there were some patterns among successful buyers, which suggests there’s an optimal way to navigate today’s market. Let’s look at how recent home buyers landed their houses.
They Paid a Premium
Nearly a third of recent buyers (31%) paid more than the asking price for their home. While that’s to be expected in a competitive market, many offered far more than is typical.
Agents have traditionally suggested offering 1% to 3% over asking to secure a deal. But of the recent buyers surveyed, a third offered up to 10% over asking, a quarter offered 11% to 20% over asking, and another third offered 21% to 30% over asking. These dramatic overpays were especially common in booming, desirable markets.
Among these buyers, the median amount paid over the listing price was $65,000. This number was even higher among first-time buyers, who paid a median of $77,500 over the list price.
Overall, 57% of buyers surveyed bought a home that cost more than the national median price of $428,700, though first-time buyers paid more than repeat buyers. First-timers paid a median of $510,000, while repeat buyers paid $450,000.
Every buyer goes into a home search with a list of priorities — characteristics such as square footage and school quality. But in 2022’s competitive market, the vast majority (80%) had to compromise on those priorities in order to land a house.
The top priorities for these buyers were a good neighborhood (50%) and price (45%). Yet 25% of buyers ended up settling for a home in a less-than-ideal neighborhood, and 35% of buyers exceeded their budget.
Those weren’t the only compromises. Nearly a quarter of buyers (24%) bought an older home than they would’ve preferred, and 25% bought a smaller home than they wanted.
In light of all these compromises, it’s perhaps not surprising that 1 in 5 buyers (20%) ended up dissatisfied with the home they bought.
They Took Some Big Chances
Most people wouldn’t buy a car without test-driving it first. But many Americans say they would buy a house without ever stepping foot in it.
The survey found that over a third of recent buyers (36%) made an offer on a home sight unseen. While virtual home tours have become impressively immersive, this is still an obvious risk.
Over two-thirds of the buyers (67%) who put in a sight-unseen offer were millennials, and many were first-time buyers. (First-time buyers, perhaps desperate to buy into a rising market, were 1.6x more likely than repeat buyers to make an offer on a home sight unseen.)
And Those Risks Didn’t Always Pan Out
About 1 in 6 recent home buyers (17%) said they regretted their purchase in part because they bought sight unseen.
But conventional buyers also experienced buyer’s remorse at a significant rate. Overall, 72% of all buyers said they had regrets about the home they ended up buying.
The most common reason for buyer’s remorse was paying too much, cited by 30% of buyers, followed by buying too quickly (26%).
They Made Offers on Multiple Homes
Being a seller is relatively easy right now: No matter what home-value estimates might tell you, your final sale price could end up being far higher.
Eighty percent of recent buyers had to make more than one offer before receiving an acceptance, and out of those buyers, 41% made an offer on five or more homes. Additionally, 1 in 10 buyers made an offer on 10 or more homes.
Repeat buyers had a significant advantage when it came to these bidding wars. They managed to get their very first offer accepted 25% of the time, compared to only 17% for first-time buyers. First-time buyers were also 1.6x more likely to submit at least 10 offers before finally having an offer accepted.
This disparity is likely due to the fact that repeat buyers come to the table with cash from the sale of their previous home, while many first-time buyers are seeking financing.
They Bought Fixer-Uppers
Most who closed on a home purchase didn't spend extra time waiting for a newly renovated home to come along. The majority of recent buyers (55%) purchased a fixer-upper. Of those buyers, 75% were first-timers, including many millennials.
Interestingly, the average fixer-upper costs more than a home that needs no work: Fixer-uppers averaged $187 per square foot, while homes in good condition averaged $163 per square foot.
They Were Patient
Because of heavy competition, recent buyers took a while to get into their new home. Almost two-thirds of buyers (61%) searched for more than a month, about a third (32%) searched for more than three months, and 12% looked for longer than six months. While some of these buyers were just being selective, others were likely trying to improve their borrower profile on the fly, buffing up their credit and improving their debt-to-income ratio.
Again, repeat buyers had a big advantage. They were twice as likely as first-timers to land a home in less than a week, as they had cash in hand from the sale of their previous home.
They Had a Good Agent
Around half of survey respondents (49%) said the home-buying process was easier than they expected. The most common reason cited for their smooth transaction was finding a good real estate agent.
Buyers found themselves in an especially strong seller’s market, in which 43% had to make financial concessions to get the home they wanted, and 27% had to close on the seller’s timeline. That steep power imbalance makes an agent’s assistance even more valuable. First-time buyers were especially in need of counsel, as they were twice as likely as repeat buyers to say that negotiating with the seller made the deal more difficult.
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