In many parts of the country, potential homebuyers have encountered a low number of homes for sale. According to many real estate analysts, the situation is unlikely to improve any time soon, as more Millennials decide they are ready to make their move into homeownership.
Winning the Bid
With demand for housing increasing faster than supply, home buying in some areas could soon qualify as a competitive sport! Here are some tips to help you come up with a winning bid, while avoiding overpaying for your home, if you live in one of these areas.
1. Know what you want. In a tight real estate market, being decisive is key. Once you see what you want, you will need to act.
2. Have a number in mind. With the currently limited supply of lower- and midpriced homes, decide just how far you can comfortably stretch financially before you start searching. Looking at homes beyond that range in hopes that a seller will accept a lower offer to get the deal done is a strategy that works best in a buyer’s market.
3. Have financing lined up. Be prepared with a preapproval letter from a Loan Officer and have your down payment ready to go. Sell your current home first if you are trading up so that you have cash available for your purchase. Those who can close the fastest typically have the advantage with sellers.
4. Be considerate. Being available for showings on the seller’s terms is essential. This may mean leaving kids with a sitter and asking follow-up questions via email, rather than staying after the showing to chat.
5. Show them the money. Expect to put more money down when you are submitting your contract. Generally, $1,000 is assumed, but the more you can put down the more serious you will look. Also, you are likely to be in a better position if you submit your best offer first. Sellers may not be inclined to negotiate when multiple offers are likely.
6. Get personal. Include a letter about yourself and your family with your offer. It should be brief and express what it is about the house that appeals to you and why you are certain this property is the perfect home. Long-time owners may weigh emotional commitments higher than financial ones.
7. Minimize contingencies. In a seller’s market, you are more likely to make concessions than the seller. That may mean adapting your closing schedule to theirs. It also means that an offer contingent on selling your current home is not as likely to be accepted.
8. Level set your expectations. In normal markets, a seller will leave appliances and drapery—perhaps even furniture—or clean and refinish floors before listing. In a seller’s market, such niceties may not be present.
9. Be ready to walk. In a seller’s market, it is easy to buy into emotional decision-making. While appeasing the seller will get the sale done, that doesn’t mean skimping on essentials, like a thorough inspection, or overpaying for the condition of the home.
When buying in a seller’s market, keep your eye on the prize. More than just closing on something, it is still about finding the right home, at a price you can afford, with the features you need to ensure your family’s comfort and enjoyment for years to come.