Marcus and Danelle Marsh bought their first home during the COVID-19 pandemic.

Marcus and Danelle Marsh bought their first home during the COVID-19 pandemic.

Photo provided by Danelle and Marcus Marsh

First-time homebuyers struggle to find homes in hot market

By: Mary Beth Almond | Metro | Published April 21, 2021

METRO DETROIT — Buying your first home is stressful at any time but especially during a global health crisis.

But as COVID-19 continues to rage on, local Realtors say they are actually seeing a rise in clients hoping to purchase their first home.

“There’s an increase in first-time homebuyers because there are more people that can afford to buy houses now that couldn’t afford to buy them before,” said Debbie Robbins, an associate broker with Remax Classic.  

Buyers also want to take advantage of record-low interest rates, she said.     

“The positive is, interest rates are really low, so people can afford more of a house than they may think they can,” said Robbins.

More time at home due to COVID-19 is influencing what homebuyers are looking for in their first home, according to Realtor Patricia Phillips, of Real Estate One.

“Home has become where everything is done now,” she said. “Before, we were seeing wide open spaces. Now, we’re seeing the need for having a home office, or an isolated study room, even multiple work rooms, because sometimes both the parents and their children have to be working from home, so everybody needs to have their own space.”

Nowadays, rooms and spaces in homes need to serve multiple purposes. An office might also serve as a workout room, and a family room might need to become a virtual classroom during the day.

And outdoor spaces are more popular than ever.

“Since houses have become everything, you need to be able to spread out, and you need to be able to entertain at home — and outdoor entertaining is a big part of that,” Phillips said.

But to get the house of their dreams, homebuyers have to move fast, because housing inventory is at an all-time low.

“Every spring, we see a lot of first-time homebuyers, but unfortunately, there are not as many houses on the market because of the pandemic,” Robbins said. “People just want to stay where they are, so that means the inventory for first-time buyers to look at has been, and this is happening nationally, limited. We have a lot less houses on the market for spring than we would expect.”

The lack in inventory, Phillips said, makes it frustrating to be a buyer in this market.

“The last couple of houses that I’ve listed, we’ve had 20-30 offers from 50-60 showings within two days. That gets very frustrating for both the buyers and the sellers, and for the agents, because we have to go through and vet all of these offers and people. People get mad at you because they didn’t get a chance to see it or all the showings are taken up.”

On average, buyers are making at least six offers before securing a home.

“It’s six to eight times — sometimes I’ve heard as many as nine or 10 houses — that they may make an offer before they land in a home. That’s the norm right now, six offers. If you manage to get a house and haven’t made six offers, you’re blessed,” Phillips said.

First-time homebuyers Marcus and Danelle Marsh, of Detroit, said it took three months and over five offers before they were successful.

“Even though this is our first time and we didn’t know what to expect … we did get a little frustrated with the process. But it’s all good because what we ended up with in the end has the features that we wanted, so we’re thankful,” said Danelle Marsh.

The couple was looking for a home that was updated, had three bedrooms, a modern kitchen, a finished basement and a garage.

To edge out the competition, they reluctantly put in some extra money — which they had originally hoped to put toward home improvements — toward their offer. But it worked to their advantage, and they are currently awaiting the closing date for their first home in Eastpointe.

Like the Marshes, many homebuyers are getting creative and using various tools as leverage in the hopes of winning offers.

“The demand is very high, so we’re seeing people do a lot of unique things with regards to their offer. One, the offers are coming in very clean. They are not asking the seller for anything — no home warranties, no repairs, no nothing — and the buyers are offering things like appraisal guarantees. A lot of times, it’s common to put a $5,000, $7,000 or a $10,000 cap on the appraisal guarantee, meaning they will pay that amount over the appraised value, not to exceed the sales price of ‘blank.’ Just this past week, I got one with no cap on the appraisal guarantee. So, regardless of what the appraisal was, they are going to go through and pay the purchase price of the house,” Phillips explained.

People who want to be successful have to do something to make their offer stand out.

“Sometimes, it’s the timing. Maybe they need time to find another house, and you don’t have an urgent move situation, so you can let the seller have extended occupancy or have occupancy for free. There’s other ways to pass on value to a seller other than just in the sales price sometimes. You have to be competitive,” she said. “You just have to stick with it. You just have to stay in the game.”