Buying in Maine’s wild real estate market takes perseverance and planning, as people who have made eight unsuccessful bids before closing on a property know.
Homes are selling in less than a week, and still are drawing multiple offers. By preparing financing ahead of time and remaining flexible, buyers can give themselves an edge when bidding on a house. Sellers can make their homes attractive to buyers without spending a lot on repairs or staging before listing their homes.
A tight market and high prices are likely to continue for the next couple of years, so buyers and sellers need to be prepared, experts say.
“This summer I had 48 hours to show a home before it went under contract,” Kortnie Mullins, vice president of the Bangor Region Realtors Association, said at real estate webinars hosted Monday and Tuesday by the Bangor Daily News.
Inventory continues to be low, which led to an 11 percent decline in home sales across Maine in October compared to October 2020, according to the Maine Association of Realtors. At the same time, prices were up 10 percent, with the median sales price statewide for existing single-family homes reaching $308,000 in October. Available for-sale inventory was down 56 percent compared to pre-COVID-19 levels in October 2019, with less than a two-month supply of homes in October.
Still, there are deals to be had for those who are prepared. Here are some tips for buyers and sellers from the experts.
Line up financing ahead of time. If you’re not paying cash, get prequalified by a lender so you know what you can afford and are ready to make an offer when a home you like comes on the market. Some buyers are using equity in their current house to put cash down on a new home. Look into programs for first-time buyers, such as MaineHousing’s plan that offers $3,500 toward the downpayment and closing costs on a loan for completing a class on home buying. And conventional mortgage rates are still low, Kristen Keith, a mortgage broker at Machias Savings Bank, said.
Be flexible and look at options. Multiple offers continue to drive up prices. However, almost 25 percent of homes don’t appraise high enough for a loan at the high sales prices in the market now, Mullins said of the sales at her real estate firm in the past year. While a buyer may kick in more cash or a seller may lower the sales price to decrease the loan size, many of those homes come back on the market and buyers might be able to get them at a better price.
Factor in added costs after you buy. Construction costs have doubled in the last four years, Tim Wells, director of the Greater Portland Community Land Trust, said. It’s also tough to find a contractor, especially those for smaller jobs. Depending on where you live, transportation may become the second-highest expense after the mortgage.
He warns against giving money up front for materials, as that is a common scam now with contractors taking money and walking away. If you plan to make an addition, check the local zoning rules to make sure it is allowed, Jeff Levine, director of the Maine Affordable Housing Coalition, said.
Know where you are going to move to when your home sells. Homes are selling so quickly that sellers can be at a loss as to where they will live once the new owner takes possession. In Maine, sellers need to be out of their homes on the day of closing, Aaron Bolster, president of the Maine Association of Realtors, said.
He advises buying your new home first if you can afford to do that or plan to rent an apartment — and rentals also are in short supply and could cost more than your current mortgage — or move in with a family member. Another possibility would be to rent or lease your home from the new owner for a short time until you find a new place to live.
You do not need to do elaborate staging or invest in fixing up the house to get a higher price. You do not need to paint inside walls or pay to fix everything, because good luck finding a contractor, Mullins said. The outside of the home should look presentable with no paint chipping or other unsightly problems that could turn off a potential buyer.
“The biggest thing is to declutter, take up rugs, take down personal things on the walls,” she said.
Bolster said the first thing buyers see when they look at a house online is the photos, and cluttered rooms make it difficult for them to envision themselves in the house.
Never take the first offer: Taking the first offer on your home may be tempting, but Bolster advises letting it sit on the open market for a few days to see what buyers are willing to pay. Housing units still are in short supply, with Maine having about 25,000 fewer units than are needed, he said.
“The seller is in the driver’s seat,” Mullens said.