Low Inventory of Homes in Metro Chicago Real Estate Market Poses Challenges Buyers Can Surmount with Planning and Positive Attitude, RE/MAX Brokers Advise

Chicago, IL, July 26, 2013 --(PR.com)-- Everyone knows that old truism: the three most important things in real estate are location, location, location. But today, the three most important things in real estate may be timing, timing, timing.

Blame it on the low number of homes for sale in the metropolitan Chicago real estate market. The area, like many across the country, is in the middle of a low-inventory market. This has driven up competition for those homes that are for sale. That is good news for sellers, as housing prices in the Chicago area have steadily risen since the start of the year, but buyers are finding this low-inventory market to be challenging.

"For buyers, timing is everything today," Myalil said. "If buyers don't act quickly, someone else will snap up that home they want."

Fortunately, buyers can successfully navigate today's home-selling market, even if the number of homes on the market remains low relative to demand. According to Myalil and other RE/MAX brokers in the metro area, buyers must be ready to make an offer as soon as they see a home they like. This means buyers must get pre-approved for a mortgage loan before they start shopping, and they must be willing to make full-price offers.

In multiple-bid situations, which are becoming increasingly common, buyers might have to bid above list price if they want to nab the home of their dreams.

"This is the market that sellers have been waiting for," said Joanne Levicki, a broker with RE/MAX Unlimited Northwest in Huntley. "The low inventory is starting to bring housing prices up. When sellers put their homes on the market, they go right away."

This trend is showing no signs of slowing. The number of homes for sale in the nine-county Chicago metro area was down to 34,600 units at the end of June compared to just under 49,600 units a year earlier, RE/MAX reports. That June 2013 inventory number represented slightly more than three months of supply of homes at the June sales pace.

While inventory is down, demand remains high. Home sales through the first half of 2013 jumped 27 percent in the seven-county Chicago area when compared to the same period one year earlier. This has caused housing prices to rise. RE/MAX reports that the median home price in the Chicago area stood at $170,000 for the first six months of 2013. That's up 6.25 percent over the January-June median price last year.

Broker Thomas Domasik, with RE/MAX 10 in Palos Park, Ill., said buyers must be pre-approved for a mortgage loan if they hope to succeed in this market.

It's important that buyers know the difference between pre-qualification and pre-approval. In a pre-qualification, mortgage lenders estimate how much they'll be able to lend borrowers based on the income, debt and asset data that the borrowers provide.

A pre-approval is a more rigorous process. Borrowers must provide lenders with documents, such as tax returns, paycheck stubs and bank statements, verifying their income, assets and debts. They'll also give lenders permission to run a credit check. When pre-approval is done, lenders will provide borrowers with a letter stating exactly how much mortgage money they are willing to lend.

Buyers with pre-approval letters are attractive because sellers know they have access to financing. That greatly lowers the odds of a real estate deal falling apart.

Because of this, Domasik said, sellers are more likely to accept the offer of a pre-approved buyer over one who isn't, all other things being roughly equal.

Bob Krawitz, a broker with RE/MAX Signature in Chicago, warned that buyers must be prepared for a bidding war. Attractive properties in today's low-inventory market often generate multiple offers. Frequently, buyers who want to win these homes will have to make a full-price offer. They might even have to offer more than the home's list price.

“The pendulum swings back and forth in real estate,” Krawitz said. “We were in a buyer's market. Now the pendulum has swung again. This has become a seller's market.”