At 20Fathoms, we regularly field inquiries from people who are considering a move to Traverse City and checking out what amenities are available. As we shared in a previous article about moving to Traverse City from an urban area, one key concern for newcomers is the challenging housing marketing.
To provide insight into Traverse City’s housing market and how you can successfully navigate it, we turned to 20Fathoms friend Meg Zammit, a local real estate agent and relocation expert. Keep reading to see what she had to say.
Location, location, location
There’s a piece of advice about real estate that is widely known and repeated: location, location, location.
In most cases when we say this we are referring to specific locations within a city. However, it’s a little different in Traverse City where the entire region’s aesthetic is driving the demand for this location. We’re in an incredibly unique situation where newcomers are drawn by the lifestyle and landscape first and foremost, and careers and housing come second.
Traverse City draws people here from the far reaches of the country. It’s an Instagram-worthy FOMO location with sparkling blue waters and endless miles of trails to explore. There’s a community passion for the arts, an explosion of gastronomical delights, and down-to-earth friendliness and neighbor-helping-neighbor attitude.
What’s happening with the housing marketing in our backyard is an echo of what’s happening across this country: high demand and low inventory. Sure, there are other factors at play in Traverse City but, at the core of the problem there is simply a deficit in homes being built versus homes needed.
Winning a Bidding War
When submitting a bid on your new dream home, consider these five components of the purchase agreement that will most appeal to the seller:
- Price: Who offered the most
- Inspection period: Who is willing to take the least amount of time to inspect property
- Earnest money deposit (EMD): Who offered the most
- Financing: Cash or loan type
- Closing date: The sooner the better
In many situations the buyers with the highest purchase price, the shortest inspection period, the highest EMD, and the quickest to close will be chosen.
Now Add Possession to the Equation
In markets like ours where sellers must also identify and secure their next home prior to leaving their current home, possession details could impact which offer is accepted. Previously, a buyer could expect to receive possession of a home on the same day or within a few days of closing on the home. In an effort to accommodate sellers and present a more appealing offer, buyers are increasingly allowing sellers to retain possession of the home for 30 days or more at no charge to the sellers.
Consider an Appraisal Guarantee
Another tactic that has become more popular in recent months is enacting an appraisal guarantee on the offer to purchase. With an appraisal guarantee, the buyer essentially states they are willing to pay X amount above and beyond the appraised value of the home. Here’s an example of what that could look like in practice:
The seller receives three offers on their home that is listed at $300,000. The listing agent shares their concern over the home appraising for more than $350,000. All three offers are for $375,000 but one of them states that the buyer will guarantee the appraisal up to $25,000. Should an appraiser value the home at $350,000 the buyer who is willing to bridge the gap between the appraised value and the purchase price out of his/her pocket gives the seller the higher net profit.
Beware of Waiving Inspection
More and more buyers are also waiving their right to an inspection period in this frenzied market. However, the purpose of an inspection is to verify there are no major deficits or defects in the home like structural damage or a failing roof and there are very few situations in which I feel comfortable with a buyer waiving their inspection. Cash investors and contractors who fully understand what could lie behind the walls and are willing to assume the risk, are typically the only exceptions. Otherwise, waiving inspections is a major “buyer beware.”
Key Take-aways for Buying a Home in Traverse City
There are so many variables and factors at play in a hyper-competitive market, but here are the highlights:
- Work with an agent you trust, who understands the market, and has your best interest in mind. To find a good match, ask friends and family to recommend agents they’ve personally worked with. Also, it’s a good idea to interview a few agents to learn more about their experience and community involvement, as well as to help identify someone with whom you have a good rapport and similar communication styles.
- Set boundaries with yourself: honestly consider how much you’re willing to pay out of pocket to “win” and at what price you walk away from the home.
- Prepare for what matters to sellers: An offer well above asking price, a short inspection period, a sizable EMD down, and accommodating them on possession of the home after closing.
Lastly, now is a great time to take up meditation or yoga — anything to help you practice the patience you will surely need as you search for that next home!
For more information about living, working, and playing in Traverse City, visit Discover Traverse City (20Fathoms), Michigan’s Creative Coast, Downtown Traverse City, or Traverse City Tourism.
Meg Zammit is a real estate agent who has lived in Traverse City for almost 20 years after time spent in Detroit and Melbourne, Australia. Helping people move here is a passion of hers because she knows firsthand how easy it is to fall in love with this area.
20Fathoms is a tech startup incubator and coworking space in Traverse City, providing programs and resources to support business and career growth.