Five Tips to Help You Buy a Home in a Seller's Market
June 24, 2021
June 24, 2021
If you are in the market for a new home, you’ve likely heard the news that supply is tight and demand (and prices) are soaring. While this can make the process seem even more daunting, the good news is there are steps home buyers can take to make their offer more appealing. Here are six tips to consider to help your offer stand out.
1. Have your mortgage pre-approval ready.
While this is an important factor anytime you want to buy a home, it’s absolutely imperative when buying a home in a seller’s market. In fact, it’s quite possible that a seller won’t even consider your offer if you don’t have financing in hand. So before you even start looking, make sure to contact your mortgage lender to determine how much you would be approved for. They’ll want to know more about your budget and financial goals to help you find the loan program that’s right for you.
2. Know your budget and where/how to allocate it to go the farthest.
Browsing homes online can be lots of fun, but can also help set realistic expectations. Until you start seeing various homes, you can’t fully understand how far your dollar may or may not stretch. Perusing listings can help you hone in on your non-negotiables, whether that’s being in a certain neighborhood/school district or having an extra bedroom that can accommodate your new work-from-home lifestyle. Having that wish list in hand can help you focus your search.
3. Seek the services of a knowledgeable real estate agent.
Online research can only take you so far. You will want to rely on a market specialist who can help locate the best opportunities within your stated parameters. And if you and your partner are at an impasse over what you consider “non-negotiable” for example, you insist on an extra bathroom and they think an attached garage is important, a third party can help you work through conflicts to find resolutions as you begin the house hunting process. Also, many first-time homebuyers might not realize that the services of a home buying agent are typically “free” to you as sellers pay these costs, both to their agent and the buyer’s.
4. Be prepared to act fast and make your highest and best offer first.
Very few sellers are open to negotiating these days because they don’t have to. That’s why you want to go in with the strongest offer possible to help put you at the top of the list. Submitting a low offer in hopes they’ll come back to you with a better price is unlikely to work if indeed the market remains as strong as it is. Also talk to your real estate agent about the possibility of an “escalation clause,” which says you’ll pay a certain amount over the highest offer they receive, up to a potential ceiling. This can be a complex financial maneuver, so be sure to seek your agent’s and financer’s advice and make sure it aligns with your financial ability and goals.
5. Consider what else you can offer to “sweeten” your bid.
Yes, extra money is always the best incentive to a seller, but there might be other factors that could entice them to choose your offer. One that is common is a longer close, which allows them to stay in the house as they get their own next move lined up. In today’s housing market, the seller often finds themselves with a quick sale, which is great, but sometimes it’s so quick they don’t know where they are going next or don’t have their move organized. Allowing them to stay in the house can help them buy time that can be useful for them to make their plans.
Another tactic that can get results is known as a “love letter” where you let the seller know why you would be the perfect buyer. For example, if you can tell they are pet lovers, let them know how much you love their fenced backyard as a place for your rescue dogs to run. Or, if they raised their kids there, they may be sentimental about letting the house go to another young family if you fit the description. With any of these possibilities, seek the advice of your real estate agent who will know the local market norms better than you.
Buying a home in a sellers’ market can be stressful, but getting your financing set up doesn’t have to be. Contact Valley Strong Credit Union today to discuss our mortgage programs and find the one that’s right for you.