Amidst an inventory crunch and rapidly increasing prices, here are some strategies to win in today’s housing market.
The national real estate market is characterized by mixed trends, with some positive changes afoot for buyers in a time when historically low inventory is causing rapidly increasing prices and stiff competition for homes.
The days of receiving 10 or more offers on a house within a day of it being listed may be gone for now. Inventory is up since the start of 2025 — though it is still dramatically lower than it was in the years leading up to 2022. That means homes are staying on the market slightly longer and buyers have a little time to consider their options and some room to negotiate, says Marco Santarelli, founder of the national company Norada Real Estate Investments.
Buyers should know, though, that home prices are still climbing after double-digit increases in 2020, 2021 and 2022. The market is expected to continue to appreciate, but at a more modest pace.
What does all this add up to? Whether you are on the hunt for a home or have put your house on the market, or whether you are a real estate rookie or a veteran, experts recommend starting the process as soon as possible. If you’re ready to start now, read on for guidance provided by business professionals and those who were recently in the market.
How to choose a realtor and mortgage lender
While you can buy or sell a house on your own, most in the real estate business recommend you choose a real estate agent and mortgage lender who you connect with. And if you don’t, move on.
“Find a realtor you like, and you’re allowed to shop around for one if you don’t,” says Michelle Kennon, who with husband Daniel purchased her first home last year in Columbus, Ohio.
They allowed themselves plenty of time to search, looking at about 20 homes a month before finding what they wanted. A big part of that process was finding the right real estate agent.
Trust is critical, so look for someone who clearly understands your needs and who will support your efforts, Daniel Kennon says.
“Don’t feel bad about bugging your realtor; that’s their job,” he says. “Take your time to find out what you really want, but when you find something, go get it.”
Ebony McKnight and her brother Armando McKnight sold their mother’s home last year in about two months. They got a few offers before closing the deal, and it helped tremendously to have a good realtor, especially for Ebony McKnight, who lives in California.
“My expectation was to work with a realtor who understood my needs and could support that, and trusting the process wouldn’t be cumbersome and that communication would be effective,” Ebony McKnight says. “I did not have to be consumed with a lot of details. Our realtor was the liaison and put things in layman’s terms for us.”
Buffie Patterson, president of Columbus Realtors, served as the agent for the Kennons and the McKnights. Having an agent is important for both buyers and sellers, she says. “An agent will understand the marketplace and a client’s needs and then connect them with the right professionals who can get the job done,” she says.
To find a good realtor, get recommendations from friends and colleagues, research online or drive through neighborhoods you like and look for agents on real estate signs, she says.
“The client should interview me just like I interview the client. We want to work together,” Patterson says. “Find someone you feel comfortable communicating with that is going to talk you through the complexities of a real estate transaction. We do this every day.”
Good questions to ask a prospective agent include how they will promote your home if you are a seller and how will they differentiate themselves in the market, says Trish Conrad, vice president of sales at World Class Title. “The importance of having a realtor is massive, especially in the market we are in,” she says. “Find out who they partner with and who they work for.”
But even before beginning your home search, you might want to consider finding a lender, says Brent Diebert, mortgage loan originator at Heartland Bank.
“I typically recommend that buyers speak to a lender first so they can get an idea of what they qualify for before they go out and start looking at homes,” he says.
Lenders can help buyers set reasonable goals and expectations as they assist buyers in qualifying for a loan. Critically, lenders give buyers a big-picture understanding of what their monthly payment will look like under various loan configurations, taking into account sales price tiers, interest rates, property taxes and insurance.
“The last thing I want to do is have somebody with expectations of a mansion but can’t afford it,” Diebert says. “My job is to explain how everything will fit into their budget.”
Like finding a realtor, pros in the industry recommend you shop around and talk to other people who have gone through the process. Bankrate.com, a personal financing consulting website, recommends six other steps:
- Strengthen your credit score.
- Determine your household budget.
- Learn your mortgage options.
- Compare rates and terms of different lenders.
- Get preapproved for a mortgage.
- Read the loan estimate’s fine print.
How to get the best home financing
In January, interest rates were just under 7 percent. Assuming a 20 percent down payment on a median-priced home, the monthly mortgage on a 30-year loan would be nearly $1,700, not including taxes and insurance, says Heartland’s Diebert.
“People really care about payments, and I encourage them to do the math,” he says.
Interest rates are higher than they were a few years ago, and buyers can lower their costs through a variety of institutional programs. Many lenders, including Heartland, can assist with down payments and closing costs, depending on income, Diebert says.
Other places to seek aid would be federal, state and local government-backed programs, including from Fannie Mae, Freddie Mac, Good Neighbor Next Door, the National Homebuyers Fund, Federal Housing Administration, and USDA and VA loans. The Ohio Housing Finance Agency also offers guidance downpayment assistance programs. Some buyers seek mortgages longer than 30 years, but that increases the interest rate on a loan exponentially, Diebert says.
Home buyers can reduce their interest rates by buying down points on the loan. These are fees the borrower pays the lender upfront to get a lower interest rate, typically 0.25 percent. Each 0.25 decrease in the rate generally costs the borrower 1 percent of the mortgage amount.
I tell people they have to look at what this will cost them and how long it will take for them to recoup that money,” Diebert says. “So much about buying a home is personal preference.”
Daniel Kennon suggests his fellow buyers give themselves time to research, and to use some caution when talking with lenders. “Find a lender and get the numbers from them early and see if what they would give you is what you can afford,” Daniel Kennon says. “They would have given us more money than I thought we needed, but it wouldn’t have been comfortable.”
What is the appraisal gap?
One shift in some markets is a reduced use of appraisal gaps in sales negotiations. When a contract involves an appraisal gap, typically the buyer agrees to pay the seller the difference between the value of a home as determined by an appraiser and the sales price as agreed by buyer and seller.
In a hot market, appraisal gaps became commonplace in the most desirable neighborhoods and price points. But these days, their use has cooled off. “I think part of that is the market is more balanced now,” Patterson says.
A couple of years ago, inventory was even scarcer (it’s still scarce, to be sure) and buyers “were going all out” in terms of how much they offered for a home, Patterson says. Some houses were getting more than 20 offers, and at one point, a buyer offered $90,000 over the asking price for a transaction she represented.
That feverish market has receded, but in the event a buyer runs into an appraisal gap situation, it’s important not to waive their right to renegotiate the contract. The buyer’s agent can go to the seller’s agent and ask for a price reduction to the value of the home’s appraisal or ask for the parties to share the cost of the gap, Patterson says.
Do buyers’ agents still get paid a commission?
Another shift in real estate markets across the country is a change in rules that took effect in August 2024, requiring buyer’s agents to secure an agreement for their commission on the sale of a home at the very beginning of the process.
The change came about when the National Association of Realtors and some of the country’s largest brokerages agreed in 2024 to settle multiple class action lawsuits filed on behalf of homeowners.
Under the new rules, a buyer cannot even look at a home with an agent until a fee agreement is reached. And information about a buyer’s broker’s compensation is no longer on the MLS, the database agents use to list and share home sale information.
It long has been the norm for the seller to pay a commission for both their listing agent and the agent representing the buyer. The seller had the option to negotiate the terms or opt out of paying the buyer’s broker’s commission, but that was not a common path in the past.
Generally, sellers still offer to pay the compensation for a buyer’s agent, Patterson says.
“What this change did was increase the transparency and open up the conversation,” she says. “Now, before I even open a door for you, I am having a conversation with you about what my compensation rate is and how I expect to be paid.”
The new rules require the buyer’s compensation agreement to be in writing, including the commission rate or amount.
Why are HOA fees increasing?
Meanwhile, those in community associations face a different financial challenge worth contemplating for buyers looking at an available property — the rising costs of condominium and homeowners association fees. Those charges typically rise every year, but inflation and skyrocketing insurance costs have supercharged those dues.
The rates vary, but some complexes have seen an increase of 50 to 70 percent in their monthly fees during the past couple of years.
Typically, the fees cover insurance, utilities, landscaping, repairs and maintenance. Many communities keep reserves, required by law to take care of major unexpected expenses or repairs.
Insurance rates are up 30 percent from last year and are the major culprit for higher dues. In the wake of the California fires and other natural disasters, insurance rates are likely to go even higher. Inflation has contributed to many communities’ rising costs for landscaping, too.
Unfortunately, the rising fees will present a problem for some people who live on a fixed income.
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