If you’re in the market for a house or property right now, you may have noticed inventory is low in certain price ranges, and that listings go under contract almost immediately. A seller’s market is one where there are more people buying houses than there are houses for sale (low inventory and high demand) – leading to higher prices and increased competition for the properties that are available. Although this can seem like a frustrating time to be a buyer, we can help set you up for success!
Here are some tips to help you show up with a stronger offer and purchase your ideal home or property, even in a seller’s market.
1. Choose a knowledgeable and experienced real estate agent who can be your best advocate.
With tight deadlines, competing offers, and a low inventory of properties, it is essential to work with an agent who is responsive, efficient, and who has experience working with buyers. If possible, find an agent who is a Buyer’s Advocate/Representative, and who knows the area you’re interested in. Your agent will help guide you through making decisions and minimizing risks, and will help you find the right property at the best price and terms. An agent can also help you negotiate the price of a sale.
Ways to find an agent include asking friends and family (we hear this one the most), or you can search for agents in your area on specific realty sites such as sothebysrealty.com, or general sites like Zillow or Realtor.com. Take the time to get in touch with a few agents to see if they are the right fit for you and your motivations and needs. Good questions to ask a potential agent include:
- Do you work with both buyers and sellers?
- What are your credentials? Are you an Accredited Buyer’s Advocate/Representative? (These agents have completed specific training in representing buyers in a real estate transaction.)
- How do you like to communicate?
- Are you an expert in certain locations?
- How many homes do you help close each year? (The national average is 12, so keep that in mind). Ideally, you will want to work with an agent who closes more homes than 90% of the agents in the local market. In most markets, that means an agent with at least 35 closings each year.
- Who will be my primary point of contact – do you work with a team?
2. Get preapproved for a loan or mortgage before you start home shopping, and have your proof of funds statement ready.
Preapproval will help you understand what you can afford, and can help you make a stronger offer on a property. This is crucial in a seller’s market where there are multiple competing offers. Having an up-to-date proof of funds letter available can also be a huge advantage and can take days out of the contract process.
Please note: preapproval is different from prequalification, which simply means you submitted your current financial status to your lender. Preapproval involves submitting an actual mortgage application, and shows the seller you are serious about buying.
3. Communication is key!
Planning a trip, or time away from your phone/email? Be sure to communicate this clearly with your real estate agent. Deadlines and signatures can be time-sensitive, and you don’t want to miss out while you’re away. Your real estate agent should also be easy to reach by phone and/or email, as they will be your guide through the buying process. Also, be sure to communicate your needs to your agent so they can help guide you towards properties that are best suited to you.
4. Adjust your expectations.
With limited inventory on the market, you may not be able to find a property that checks all of your boxes. Instead, take time before looking at properties to think about: What do you truly value in your new home? What are your absolute must-haves? What are your absolute cannot-live-withs? Be sure to communicate these with your agent. You can change paint color and light fixtures down the road, but you can’t change a home’s location.
5. Be flexible.
Thinking of attaching specific conditions (contingencies) to an offer? This may not work in your favor in a seller’s market. Be open to accommodating the seller’s needs, such as a delayed possession agreement if they need extra time to move. Budget a little extra for needed minor repairs instead of asking the seller to pay for these. Reducing your contingencies is a great way to make your offer more appealing to the seller. Other ways to increase the appeal of your offer include offering at (or above) the asking price, considering a shorter closing period, or putting down more earnest money in your initial deposit. Can you buy in cash? Great! This will help make your offer more attractive to sellers, as there won’t be any financing contingencies in an all-cash sale.
6. Stay cool under pressure.
Know your spending limits, and what you can reasonably afford. When there are multiple offers involved, it can be easy to want to outbid everyone else, especially if it’s a property you really love. Establish strict limits for yourself before you submit an offer, and stick to these so you don’t end up with a mortgage that is more than you can afford. However, this doesn’t mean submitting low offers, as homes in a seller’s market can go for above the asking price. Discuss pricing strategy with your real estate agent – as they will be able to best advise you in certain situations.
Buying in a seller’s market can feel extra stressful – but working with an agent, being extra prepared, and knowing your absolute must-haves will go a long way.
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