Buying a home can be a wonderful experience, but there are also a lot of moving parts to the process. Understanding the market is key to buying your dream home at the right price. This article will discuss how to buy a home in a seller’s market. A seller’s market means that there are more people looking to buy a home than there are homes for sale. In a case like this, you may face competition for the home you want as well as limited choices. Both of these mean you will need to be able to act quickly.
Here are eight tips to help you navigate the waters when buying in a seller’s market.
Tip #1: Get Your Financing in Order
In a seller’s market, you have to be able to move quickly or someone else will beat you to the punch. One way to show you can move towards closing quickly is to get pre-approved before looking at homes. A preapproval letter states that your lender is willing to lend you a certain amount of money on a house. Not only will this help you know which houses to consider, but it will let a seller know that you are a serious candidate.
If you happen to fall in love with a house that receives three offers, the best offer will get the home. Being preapproved is often key to being the best offer. Additionally, being pre-approved gives you a better chance at negotiating the terms of the contract. As someone that has a real chance of buying the property, your needs and wants will influence the seller more than someone who may have questionable financing.
As your buyer’s agent, Recadia would recommend that you include not only the contract but your preapproval letter with each offer in a seller’s market, especially in a multiple-offer situation.
Tip #2: Work With a Buyer’s Agent That Knows the Competition
As your buyer’s agent, Recadia knows the competition in the area and will help you craft an offer that will be taken seriously by the seller. We will be able to find out the details about the home before you put in an offer so that you don’t offer too low or suggest a timeline that can’t be met by the seller. Not only that, we can help you negotiate terms during a bidding war with other potential buyers.
Due to Recadia’s flat fee commission structure, we credit back a significant portion of the commission we are paid back to the buyer. This means that this money can be used in the negotiations process to increase the sales price, thus increasing the value of the offer.
Our resources, experience, and skills will be priceless when it comes to buying in a seller’s market.
Tip #3: Be Flexible
If you can be more flexible than other buyers, you may be able to get into the home of your dreams when others cannot. For instance, if a seller needs to move quickly and you can move quicker than your competition, you will get the home. The same holds true for a seller that wishes to delay closing for three months to get their own affairs in order. If you can wait when your competition can’t, you will get the home.
As your buyer’s agent, Recadia will ask the listing agent questions to determine the best way to structure your offer on a home. We will know when the buyer wants to close, whether they have a purchase pending, and other items to help us craft a contract that will best suit the seller.
Tip #4: Connect With the Seller
If you are making an offer on a home with multiple offers, a personal letter can go a long way. Try to find a way to connect with the seller. Including a picture of your children so the seller can envision them playing in the yard or mentioning that you are a Veteran when you happen to know that they are, too, can tug at the heartstrings. In your letter, tell the buyer why you love the house and how you plan to use it. Buyers with an emotional attachment to their home will lean towards an offer with someone that will appreciate their home as much as they did.
Tip #5: Put More Upfront
If possible, consider putting more earnest money down up front. Earnest money is provided by the buyer and typically ranges from 1 to 5 percent of the purchase price. This money is held in escrow until the sale closes and acts as insurance. If a buyer backs out of the deal, they lose the escrow money to the seller. Putting more money down will show the seller how committed you are to the home.
Tip #6: Make Enough Time To Look
During a buyer’s market, a home might get multiple offers within hours of being for sale. If you only have a few hours a week to look at homes, you will miss seeing many homes that came and went while you were busy doing something else. If possible, take some time off to view homes. If that isn’t possible, be willing to view homes during your lunch hour, after work, and on weekends.
Tip #7: Be Frugal With Contingencies
A contingency is a condition you would put into a contract that must be met in order for the contract to be binding. Some common contingencies include the ability to get financing, the house passing inspection, or the ability to sell your own house first. However, the more contingencies you have in an offer, the less likely the offer will get accepted, especially in a seller’s market. The seller is more likely to look for offers that are easy and fast, rather than slow and complicated.
Tip #8: Move Quickly
When buying in a seller’s market, you will need to move quickly and make fast decisions. In fact, most buyers will only get to see a home once before making an offer. If you want to see the home a second time, it could be too late.
A good way to make decisions quickly is to know your priorities up front. Look at your wish list and know before entering a house what it has to have and what you can live without. If a home meets your “must have” list, then you should consider putting in an offer.