When you mix in low-interest rates, low inventory, and a pandemic, you get an extremely competitive real estate market. To find a home, buyers are taking risks they never thought they would.
A lack of inventory has plagued house hunters for years. Shorewest realtor, Essam Elsafy, can attest, COVID-19, has made the competition more intense for potential buyers -- especially in coveted suburbs like Whitefish Bay, Shorewood, and Wauwatosa.
"Low inventory, and really great favorable interest rates, are creating this environment where it's kind of dog-eat-dog right now," said Elsafy.
"You have to completely disregard the asking price and ask yourself 'How high over the asking price are you willing to go?'" he said.
"People are staying in their homes longer. That has been a trend, but now layer on top of that COVID-19 and now layer on top of that economic uncertainty and political uncertainly, there has been just a lot happening in the last year which is really causing people to want to just hunker down," he continued.
As a result, he explains inventory has taken a hit.
Data courtesy of the Metro Multiple Listing Services (MLS) shows new listings in February 2021 in the Milwaukee region are down 33.8 % compared to February 2020 and pending sales are down 70.5%.
Elsafy is counseling his clients through this frenzied housing market. He says acting fast is a necessity. He shared a conversation he recently had with house hunters.
"We saw a house that we liked. They were in the house for 15 minutes and the conversation went like this: 'You have been here for 15 minutes. You have to decide right now whether you're going to spend several hundred thousand of dollars and they looked at me and said, 'Essam, we spend more time picking out a pair of shoes,'" he said.
Elsafy recently worked with buyers Sophia House and Kellen Muldoon.
"I thought it was very difficult and emotional," House shared about their house searching journey.
"We'd put in a lot of offers on homes that we could see ourselves living in and. We'd get all excited that we put in an offer and then they would go with somebody else and it always seemed like we were second best," House said.
Elsafy helped them write seven offers, many above the home's asking price before they had one accepted for a house in Whitefish Bay.
"Our price range was up to $330,000 at first and then we ended up going up to $380,000," Muldoon said.
To stand out from other buyers, Elsafy says he lays out options to his clients -- some riskier than others.
"Our job is to lay out for them all of the other options. Among them is, how high you want to go on price?, not having a home inspection, not having an appraisal contingency, closing quickly, pre-scheduling your home inspection so it happens in a really short period of time," Elsafy said.
Ultimately, it's up to the house hunter. He says patience and flexibility are required.
Muldoon and House ended up with a 100-year-old fixer-upper.
"We have a big to-do list but we have a fair amount of money set aside to accomplish that," Muldoon said.