Competition in real estate can be exhausting. You might really love the killer school district, convenient commute, or local attractions that made an area your #1 choice; however, as the bidding wars rage on, you might wonder, “Should I buy in a seller’s market?”
If the answer to that question is “yes” for you, you’ll want to be prepared. Not to worry, we know what it takes to successfully navigate buying in a seller’s market and we’re sharing the info with you. Keep reading to see how you can get a leg up when shopping in a seller’s market.
1. Get started ASAP
No matter where you live, listings for homes in popular neighborhoods are often few and far between. When these homes do hit the market, they typically don’t remain on the market for very long. With that in mind, if you have your heart set on buying in a hot area, starting your house hunt early and having patience means that when the moment comes, you’ll need to act quickly.
If you’re really interested in a home, get as much info as you can beforehand: property reports, disclosures and offer due dates. These can be requested through your buying agent. Look for upcoming open house dates, or even better, set up a private house tour with your agent. Keep your schedule open, because in hot markets, available properties wait for no one.
2. Have your proof of funds & pre-approval ready
This part can be very make or break for homebuyers.
If you’ve decided you want to throw your hat in the ring and make an offer, always assume that many others have as well. Anticipating a multiple offer situation can help you come out ahead.
After you’ve seen a home, speed is often the name of the game. For truly hot markets, you might only have a day or two to get your offer submitted after viewing the home. Have your buyer agent double check with the seller’s agent regarding the offer deadline so that you can be sure yours is submitted on time
In order for you to be “offer ready” when you find the property you want, it’s crucial to have any supplemental paperwork, like your mortgage pre-approval and proof of funds for the down payment, ready to go ahead of time.
3. Keep your offer simple
Most offers include contingencies — things like completing inspections and receiving a mortgage commitment — that need to happen for the transaction to move forward.
When looking at offers, sellers tend to see contingencies as potential opportunities for the deal to fall apart. As a result, they’re more likely to choose an offer that’s relatively “clean” or reduces their risk of potential hang-ups.
In a competitive market, you might see other buyers removing or reducing their contingency periods to make their offer more competitive.
However, it’s also crucial that you feel comfortable moving forward. For example, if you choose to waive an inspection contingency, you’re agreeing to buy the home regardless of what problems may exist.
As you put your offer together, consider the maximum amount you’re willing to pay, what compromises you’re willing to make and how flexible you can be on your closing schedule.
4. Start with a strong sale price
Besides keeping your contingencies in check, there is another component of the offer that will help set you apart from the crowd and it’s fairly obvious — the offer price.
Put simply, money talks.
Sellers are likely to be enticed by a big payout, or if possible, a cash offer.
When you’re vying for a home in a popular neighborhood, you need to put your best foot forward.
As for how much you should offer, consider the asking price first. If it’s within your budget you may want to at least offer that amount if not a little more. Consider the amount listed on your pre-approval as your maximum, and work within those limits.
You can use a mortgage calculator to get an idea of what your monthly payment will look like at various sale prices.
5. Write an offer letter (aka Love Letter)
On the surface, all offers look the same. That is to say, they all generally include the same information about the buyer. In a situation where the seller is considering multiple offers, all that information can start to blend together. An offer letter or a personal note you write to the seller explaining why you’re the perfect buyer for the home, might just be the thing that sets your offer apart from the others.
Bear in mind that the ideal offer letter is short, sweet, and to the point. Your goal is to connect with the seller emotionally so that they’ll be more inclined to choose your offer. In a few paragraphs, you’ll want to tell the seller why you fell in love with their home and why they should sell to you.
Remember, here’s a reason people say “a little flattery goes a long way.” So, don’t be afraid to compliment the owner on things like how well they’ve maintained the home. Check out our post on how to write an offer letter to get tips and examples on crafting an offer letter that gets you the house.
It can feel overwhelming shopping for a home amongst fierce competition, but don’t be discouraged. With the right amount of preparation, you’ll be ready to make the necessary moves to secure the home of your dreams.
This article is not a substitute for advice from a licensed real estate agent regarding your particular situation. This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice. We always encourage you to reach out to your own agent regarding your own situation.
Written by Heidi Knight