Buying a Home in a Seller’s Market Requires a Strategic Approach
Buying a new home is stressful, and buying a new home in a seller’s market can be even more stressful. Homes often have several offers within the first few hours of hitting the market, and you may feel like you can’t even get started, let alone get to the closing. With a strategic approach, your chances of buying a new home are much higher.
Be Prepared to Move Fast When Buying a New Home
In a seller’s market there is an inventory shortage of homes for sale, which means that you are most likely competing with multiple buyers for every home you want to put an offer in on. You can’t look at a home online, sleep on it, and call your agent the next day to set up an appointment for the weekend. In a seller’s market, you need to get in for a showing asap. You want to show the seller your enthusiasm, and you don’t want to miss out. Many buyers are, in fact, making offers without ever seeing a home in person. Although it may feel fast, get in to see a house you are interested in as quickly as possible, and if you like it, be prepared to jump right in with an offer.
Have Your Financing Completed Before Shopping
A pre-qualification might sound nice, but it doesn’t mean much to real estate professionals. In many markets, a pre-approval letter is enough to show that you would be able to obtain financing. In a seller’s market, you need to go further. If you will need financing when buying a new home, go through the full underwriting process, with the only incomplete piece being the address and appraisal of the property. Going through the full process shows the seller that you are a sure thing and will not need to back out of the sale due to issues in your financing. Going through the full underwriting process is often as good as being a cash buyer. Your mortgage broker can help you navigate this process.
Be Ready to Make a Competitive Offer
In some markets, the listing price is the ceiling. You might pay the asking, but you will probably pay less and definitely won’t pay more. In a seller’s market, the asking price is the floor. In a seller’s market the seller may receive several offers above the asking price. When you make your first offer, you can’t put in a lower offer in hopes of a back-and-forth negotiation. You need to make your most aggressive offer first. A competitive offer also means fewer contingencies. A “clean” offer means that there are no contingencies around appraisals and inspections. This is a risk, but talk to your agent about whether or not it is a smart move.
Don’t Get Pressured into Overpaying
After saying you should go in with your strongest offer, it may seem oppositional to warn against overpaying, but there is a balance. Don’t allow the fear of missing out suck you into a bidding war you can’t afford. If you hear that multiple offers have come in at or above the asking price, and you know you’ve put in your strongest offer, be strong enough to know the value of the home and walk away. If you pay more than the home is worth, you may find yourself in trouble during the appraisal process. In addition, when the market stabilizes, you may find yourself in a home that has lost far too much value, and that’s never a good thing.
Establish a Connection with the Seller
This may not be a guarantee, but making a connection with the seller can help stack the deck in your favor. If the sellers like you, they may choose your offer over another similar offer. Writing a letter to the seller about what you love about their home, attempting to make a personal connection, and talking about seeing yourself in a space they’ve cared for can make a difference. There is an emotional component to real estate, and if you can take a chance, it could be worth it.
Be Willing to Walk Away
This is so important, and can also be extremely difficult, especially if you have found the perfect house. Don’t let yourself get so sucked into the game of winning the right home that you end up in a home that isn’t right for you, a home you paid too much for, or worse, both. The housing market is always in motion, and waiting a month, a week, or even just a few days you’ll find that things can change a lot.
A seller’s market can be stressful for buyers. It is easy to get discouraged when you can’t move fast enough, can’t offer enough of a surplus to the asking price, and aren’t willing to forgo basic inspections. While a seller’s market does mean you need to have a strategy, it is something you can get through with the right agent, and we are here to help. Let our real estate experts help you navigate the market and find your dream home. Contact Amberwood Real Estate today!