When the inventory of homes for sale is low and buyer activity is high, the home seller has more leverage in the market. As a buyer, you may have fewer options in a seller’s market. It will be important to understand what is going on in your local real estate market, have a plan, and act quickly when you find a house that suits you. Important things to understand about a seller’s market are that prices are only going up, multiple offer situations are likely, and homes are selling fast! Here are the top tips from real estate pros for buying a home in a seller’s market.
Our Top Tips for Buying a Home in a Seller’s Market
Buying a home in a seller’s market is going to present you with a few more challenges compared to other types of markets. Don’t worry, success can be achieved if you have a plan and stick to it. If you have prepared well and are flexible, you will be in a great position to buy the right home with terms that work for you.
With that in mind, following these tips will help put you in a prime position to beat out other buyers and land your dream home.
Get Your Money Right!
One of the first steps of buying a home in any market is to get your finances in order. When your credit is solid, debt is low, and you have saved a large downpayment, you will be in a great position to secure strong financing. Buyers with a strong financial situation often have a competitive advantage over buyers that are not as well-financed.
Consult with an experienced lender to get pre-approved for your mortgage. The lender will inform you of how much you can afford and will provide you with a pre-approval letter for your mortgage. This letter will be provided to the home sellers along with your offer to purchase.
Unfortunately, in a seller’s real estate market, homebuyers don’t have the luxury of taking their sweet time to make a decision. As soon as a new listing comes on the market, buyers and their agents will be on it like hungry sharks circling their next meal. It is important that you are aware of new listings as soon as they hit the market. Be sure to have your agent schedule an in-person showing ASAP and be prepared to write your offer on the spot if it’s a home that appeals to you. This type of market does not allow for “time to think about it” or “sleep on it”. If you take that approach, you will be late for the party!
If you are the first to submit an offer and it is a strong offer, you have a better chance of getting it accepted. The goal is to get in before other buyers submit offers too. When sellers have multiple offers at once, a bidding war is likely to happen. Not being first can cost you thousands. Have a plan and be ready to act on it.
Streamline Your Offer
When buying a home in a seller’s market, don’t get too complicated with your offer terms. Streamlining your offer terms will give you the best chances when competing against other offers. Even though you may be offering more money, asking for more in return could make your offer less appealing.
Here are the best ways to write a clean offer:
- Minimize your contingencies (if possible). Typical contingencies include inspections, loan approval, appraisal, and title.
- Remove concessions for the seller to pay for your closing costs.
- Use title and escrow companies that the seller(s) prefer to use.
- Don’t ask for extras like a home warranty.
- Make your first offer your highest and best.
Go Above and Beyond with Your Offer
In addition to simplifying your offer to the seller, sweetening the deal can make your offer that much more attractive. Keep in mind that you likely have competition from other buyers for the home you are trying to purchase. If it is the perfect home for you, it will be worth it for you to offer a little more and make the terms a little sweeter for the seller.
The best way to get the seller’s attention is to offer more money than the home is listed for. Other ‘deal sweeteners’ include putting down more earnest money and shortening contingency periods or removing them altogether. Imagine if the seller has two similar offers but one is foregoing the inspection contingency. The one without an inspection contingency will almost always beat out the other offer.
Keep in mind that buying a home in a seller’s market is going to require more of you as a buyer. Your financing needs to be solid, you have to act quickly, your offer should be streamlined, and you may need to offer more than is expected in order to secure the home of your dreams. One more way to stand out to a home seller is to make it personal. Appeal to the seller’s emotions by submitting a personal letter with your purchase agreement.
Writing a personal letter to the seller will add that human element that can help create an emotional connection between you and them. This could be what puts your offer over the top! This is a practice that is used in all markets. It can be especially effective in a seller’s market. With so much competition between buyers for any given home, offers submitted with a personal letter.
This personal letter should include some general information about you and your family. The letter should also tell the seller how much you love their home and what living there would mean to your family. Be sure to point out specific features about the home that you love. Other things to include are highlights of your strong financing, a lot of compliments about the seller’s home, and a photo of your family (if you are comfortable with that).
Want more info and tips about writing the perfect letter to the home seller? Click here.
Give it your Best Shot
Buying a home in a seller’s market can be a rewarding experience. It will require some additional strategy and an adjusted frame of mind. If you are able to put these tips into action, you will be in a great position to beat out other buyers for the home that you desire.