Being a buyer in a seller’s market can be a very frustrating experience. In a busy seller’s market, it’s quite common for buyers to lose out on multiple properties they offer on. This is an unfortunate part of the ebb and flow of the real estate market; however, there are ways to maximize your success.
Take it seriously
House hunting is not something you can go into thinking you’ll just spend free time on the weekends looking for, touring, and making offers on homes. If you do, you’re going to see many of the properties you’ve earmarked sold before you even set up a showing.
Instead, go into the process knowing that a daily commitment is necessary. Check new listings multiple times a day or watch for correspondence from your real estate agent or Realtor on new or upcoming listings. Be willing to take a short break from work to view promising properties. Once you’re there, be prepared to make a decision quickly. If you can adopt a sense of urgency and fully commit to the search process, you’ll have a clear advantage over other buyers.
Paperwork over promises
When you find yourself in a seller’s market, it’s important to be able to stand out from the rest of the pack. In order for you to look like the most promising buyer in the seller’s eyes, always be prepared to present a pre-approval letter or proof of funds at showings.
Sellers don’t have any time to waste and are extra wary during a fast-paced sellers market. Having necessary documents prepared and being able to prove to the seller right off the bat that you’re financially healthy will work wonders.
It’s quite common and usually recommended to include contingencies with an offer. If there’s a chance you can remove unnecessary contingencies, it’s smart to talk through those with your real estate agent or Realtor, because the cleaner your offer is, the better shot you’ve got at winning the property.
It’s also important to note that some contingencies seem to protect you, but in a fast-paced market they can sometimes make you vulnerable to more risk-tolerant buyers swooping in to bump your offer. Take appropriate time to talk through contingencies with your agent or Realtor and decide prior to your home search which you can comfortably pass on.
Ask any buyer and they’ll tell you they want to purchase a particular property for the least possible amount of their hard-earned money. There is strategy involved in a seller’s market since the seller has almost all of the power and you’re likely competing with many other buyers for the same property.
So how can you win the property of your dreams without overpaying? You’ve got to take the time to speak with your agent or Realtor about a fair and economically sound value for the property and weigh that against your budget. If your budget can cover a fair and economical price tag, then you can move on to evaluating how much demand there is for a particular property.
Demand increases prices, as you know; if there are no other competing buyers when you offer, maybe the original “fair and economical” price is well and good. However, if you find yourself in a bidding war, that number may need to grow a bit in order to secure the property.
Either way, lowballing during a seller’s market is out of the question. Even if you aren’t in a bidding war, a lowball offer could offend a seller enough to completely ice you out, no matter what your follow up offers may be.
Keep an open mind
The whole reason for a seller’s market is lack of inventory and subsequently higher demand. That lack of inventory can and will force you to reevaluate what you really need and want.
Keeping an open mind throughout the process will help you not only find more suitable properties, but keep your mental state intact. During this time, be open to searching in new neighborhoods, or be flexible on amenities and features you thought were must-have’s before.
Speaking of keeping an open mind… most buyers never consider the idea of building for two reasons. One, they think they can’t afford it. Two, they have some fears about the process. With inventory and existing home prices at their current levels, building has never been a smarter choice - if your budget allows it.
As for the process, it truly depends on the builder you choose. Be sure to ask your agent or Realtor for recommendations and take the time to research and meet with builders you’re considering.