Finding a perfect home on seller’s market can be frustrating, you defiantly need to know what you are doing to avoid making mistakes. Preparation is key to buying a house successfully in a hot market. With homes receiving multiple offers, buyers must move quickly and be prepared to land the house of their dreams. A competitive market is not the right environment to negotiate a bargain. It’s not a time to play hardball.
In normally balanced market buyers usually, make an offer below the seller’s asking price, then negotiate upward from there. But in a seller’s market, most cases have no room for negotiations that involve lowering the price. You actually may end up paying well over asking price after the multiple offer situation.
The harsh truth is that if you are on a hunt for your next home today, you probably will hit a few obstacles. For example, you might lose the house you want in a bidding war or it may be under contract already by the time you go see it. If you are dedicated to finding a home, you must bring on your A- game.
Another fact that you need to take into consideration is that home prices keep going up. According to the National Association of Realtors, the median price for existing homes is up nearly 5% year over year. But the good news for house hunters is that mortgage rates are remaining low. The average rate on a 30-year fixed mortgage was 3.61 percent for the week that ended May 5, according to Freddie Mac.
I have few key points that might be helpful for those who are planning to buy a home:
People naturally want to always get the best deal, and when they see the list price of the home, they automatically wonder how good of a deal they can get. Offering lower than asking price might work if the property is overpriced or if it is a buyer’s market with lots of inventory. Unfortunately, this is not the kind of strategy you should use when you are trying to buy a home in seller’s market. In seller’s
In seller’s market, you need to step up with a strong offer. The facts are that the inventory is low and the competition is fierce. Start with your best offer. You need to keep in mind that the house you want is probably going to get multiple offers and if you will lowball your offer, there is a big chance you will loose on the house.
To avoid going way over your budget, set your search below your max budget to leave room in case of an over-asking bidding war. Limit your search to homes with a healthy margin between list price and your max budget. It’s also smart to entertain the idea to move little further from your favorite neighborhood and take a look at the up- and – coming neighborhoods. You might find exactly what you are looking for.
Take an action right away! Do not start over analyzing and wasting time. Well priced homes that are in good shape are going off the market like hotcakes. When you find a home that fits your criteria (location, price etc.) do not take the risk losing it. You need to be quick and prepared. Move quickly once you find the house you want. That often means rushing out to see new homes within hours of them being listed and writing up an offer immediately if you like the house. You have to make the house hunting priority if you want to succeed.
This takes me to the next point I wanted to talk about: pre-approval letter. You need to have your finances in order. Even if you know that you’ll be approved for a mortgage loan based on your high credit score, steady income, and your low debt-to-income ratio, you need to have it on the paper for the seller to take you seriously.
The only way to prove to the seller that you’re a qualified buyer is to be prequalified from a lender. If you decide not to do that, it simply says to the seller that the buyer will struggle on getting their ducks in order and are not taking house hunting seriously. It’s important to be buttoned up and ready to go. Set an appointment with a loan officer, find out how much you can afford, check your credit, have your down payment ready to go and ignore making any major purchases. This last step I mentioned is very important. If you make a big purchase (car, furniture etc.) right before buying a home, the chances are you won’t get the loan.
Make a big earnest money deposit. Sellers often see a larger deposit as a sign that you’re serious about the deal. Also, make a backup offer. Many prospective buyers don’t want to make an offer on a house that has a pending contract. But deals fall apart over inspections, financing, and other terms. If you found the perfect house, you can make a backup offer that will put you in the first place if the initial buyer walks away.
If you want to end up with a nice home, you need to be strategic. In a seller’s market, it benefits buyers to get all the help they can. If you have a great agent on your side, you will most likely have a better chance of getting the home you want. A good agent will find out the motivations of the seller and knows how to negotiate according to that. Plus, in most cases, buyers don’t pay real estate agents, you will get all the advice and help for free.
Working with a real estate professional saves tons of time and stress, as they know the ins and outs of the process and can provide tremendous insight regarding upcoming inventory. A good agent is more than a tour guide. They counsel you through every twist and turn of your home purchase, inspiring confidence along the way.