It’s a home “seller’s market” but you can still buy.
During a buyer’s market is when most experts will recommend you buy real estate. A buyer’s market is when there are more properties for sale than prospective buyers, and sellers are more willing to go with a low bid.
However, that doesn’t mean you can’t buy a new home in a seller’s market, when there are more buyers than homes, and sellers can afford to hold out for higher offers. You just need to make sure you do it right and arm yourself with the right information. When paying top dollar in a hot market you need to make sure it’s a house you plan to keep.
Research the Market
Buying a house in a seller’s market requires diligence, which means you need to start researching even before you attend open houses. Since homes are priced to sell, you need to know what you want, how much you can spend and what things aren’t negotiable.
Licensed REALTORS can help you locate different homes that suit both your style and budget through the real time MLS system that you can’t get yourself online. Once you know your expectations are inline with your budget, you can start to dig deeper.
Working with a professional can help you make the most of your time by obtaining information about the house you’re interested in before the in person visit. Look for any disclosures on the property, property reports, showing opportunities and offer deadlines. The key is providing as much detailed information as possible prior to getting started so you are only focusing on the homes that meet your requirements vs sifting through random houses online.
Demonstrate Credit Worthiness
You should get prequalified before touring homes. The last thing you want is to find your dream home but not able to secure a mortgage. Being prequalified will help you better narrow your search and exclude any homes that are out of your price range. It also shows the seller that you’re serious about buying. Before you can make an offer, you need to have proof of funds for a cash offer or an approval letter from a reputable lender.
Make a Compelling Offer
After you have found a home you’re interested in, it’s time to put in your offer. Make sure get a list of what homes in the same area have sold for prior to making an offer from your agent. You should also ask if the seller is offering concessions.
Seller concessions are extras that some sellers offer to offset the selling price, like home warranties. In a competitive market, the buyer tends to make more concessions than the seller.
Contingencies are things like getting your home sold first, having a private inspection and the lender’s appraisal. The more contingencies in your offer, the less attractive it will be to a home seller.
Consider an Escalation Clause
Escalation clauses state that you’ll pay a certain amount above the highest bid up to the maximum offer. It’s important to know that some sellers may make a counteroffer to your escalation as well. This means they may actually increase the listing price and ask for more money. While choosing to accept the offer is up to you, it’s always better to sleep on it and, if necessary, contact a real estate attorney for further advice.
Buying a home is not something to jump into lightly. It takes more than money; it also takes time, research and financial planning. Since buying a home is probably the biggest purchase you’ll ever make, it’s always better to be thoroughly prepared to make an offer before you go on showings.
Call Sarah First to help you create a step by step plan.