Before providing tips on buying a home in a seller’s market, we must first understand what a seller’s market actually is and how it affects the real estate market. In a seller’s market, homes sell faster, and buyers must compete with each other in order to score a property. A seller’s market arises when demand exceeds supply. In other words, there are many interested buyers, but the real estate inventory is low. Since there are fewer homes available, sellers are at an advantage.
As the bidding war rages on, you may be wondering, “Should I buy in a seller’s market?” If the answer to that question is “yes” for you, then you want to be prepared as to what you can expect and what to do to help you achieve buying your new home. I have laid out the most important tips for what it takes to successfully navigate buying in a seller’s market below. These tips may even get your offer accepted.
The Art of Negotiation
So how can we combat this when buying your next home? First, you need to learn to negotiate successfully to gain a leg up on the competition. If you don’t know how to negotiate in a seller’s market, the seller probably won’t even entertain your deal. The seller has the upper hand and likely many more offers on the table, so it’s easy for them to move on to the next offer if yours comes across as too demanding. Communicate appropriately, be your charming self and negotiate accordingly to get your offer seen and ultimately, accepted.
Wave Contingencies
If you are serious about buying a home, there are a few tips to consider when negotiating. First, try to wave as many contingencies as feasible. The most common of these are home sales, financing, and inspection contingencies. With fewer contingencies, the seller knows you are less likely to back out of the deal and may choose your offer over others, even if others are offering more money.
Have No Expectations
Additionally, do not expect the seller to give away a lot. Sweeten the deal by covering things the seller typically pays for at closing. Forget about asking for the seller to remove that broken hot tub or replace the roof. If it’s the right deal for you, build in the cost of completing these upgrades on your own to make for a more clean deal. Traditional buyers may be nit-picky about small fixes or updates, so the seller will see your offer as one that will close quickly without much hassle and be more likely to approve it.
Consider Multiple Offers
Be mindful of “putting all your eggs in one basket,” and in order to avoid this, make several offers. The odds of your first (or second or third) offer being accepted are low. But the more offers you submit, the better chance you have of one being accepted. Don’t get too excited about any one property — this is a surefire way to pay too much for it or get into a bidding war. Instead, make more offers on other properties you like.
Understand Your Goals
Having your property goals laid out before you start looking is key. Determine what type of property you are looking for and the absolute maximum amount you are willing to spend. Then set cash flow or income goals. Experienced investors may go for any property that cash flows. Before you enter a bidding war, set the absolute maximum you’re willing to spend and don’t go above it. You might lose out on a property, but it’s not worth spending way more than you wanted. Know exactly what you’re looking for when buying a home, and stick to it.
Get Pre-Approved
If you know you’re going to be buying a home soon, get a pre-approval letter from your lender by submitting information about your income, other debts, and employment. You’ll also need to give them permission to run your credit score. This pre-approval shows the seller that you’ve already started the process, and it won’t be difficult for you to be approved for the mortgage to buy their home. If you’re getting your loan from a private lender, it’s best to already have an idea of how that loan might work before finding a home you want to buy. You will want to keep in mind that your pre-approval may last for just 60-90 days depending on your lender. You can easily renew the pre-approval after that point, but it will likely result in another credit pull on your credit report.
Have a Great Real Estate Agent on Your Side!
To navigate a market this tricky, expert guidance is more important than ever. Partner with an agent who has seen it all before knows how to handle challenging circumstances, and who will fight for your interests. It can feel overwhelming shopping for a home amongst fierce competition but don’t be discouraged. With the right amount of preparation and the right agent on your side, you will be ready to make the necessary moves to secure the home of your dreams. Contact Rhode Island realtor Holly Bellucci Today to get started.
