Buying in a Seller’s Market: 6 Things To Do When Buying
The current housing market appears to be characterized by the phrase “here today, gone tomorrow” In these times, you’ll need a few pointers to snag your dream home before someone else does.
The housing market is not only hot but also on fire. The United States has 3.8 million fewer homes than is required, according to the Federal Home loan Mortgage Corporation (Freddie Mac). This is due to a combination of factors, including builders’ inability to keep up with growing demands and pandemic-related delays that slowed the construction of new homes. Furthermore, according to a Wall Street Journal study, over 7 million households relocated to a different county during the pandemic. Many people moved from larger cities to suburbs because they could work from home.
All these changes have placed sellers in an advantageous position. When demand exceeds supply, buyers are at the mercy of sellers, just as they are in any other industry. If you’re a buyer, you might be discouraged by the fact that there are so many people competing for a few houses.
Seller’s Market vs. Buyer’s Market
When considering purchasing a home in a seller’s market, the first thing you should consider is the specific market conditions that you will be entering into. If the market is a seller’s market, there are more purchasers seeking for homes than there are available homes to sell. This means that there is significantly more competition for each property, and that sellers have significantly more flexibility when it comes to setting the asking price and negotiating concessions.
A buyer’s market, on the other hand, occurs when there are more homes for sale than there are potential buyers. Because of these settings, buyers have greater competitive advantage, and sellers are frequently forced to make compromises in order to attract interest, such as lowering the asking price or including a few additional features.
Every season of the year, the real estate market cycles through these two stages, which means that the outlook for a buyer might be drastically different from one season to the next. If, on the other hand, it’s a seller’s market and you don’t have the patience to wait it out, you’re not completely out of luck.
Buying a Home in a Seller’s Market
Here’s the list of things to help you put your best foot forward in the Seller’s Market;
1. Don’t try it alone
FSBO and buying a house without a realtor are frequently viewed as ways to save money. However, in a seller’s market, it may be best to rely on a Realtor or Broker. These experts know things you don’t, have access to resources and contacts, and have years of experience on their side. Buying and selling homes is a relationship business, and working with a dedicated experienced agent is more important than ever. With sellers having the upper hand in the market, buyers require the assistance of a realtor or broker to ensure that a property is correctly valued, repairs are negotiated, and timelines are met so that the buyer can finally move in.
2. Be ready to move quickly
There is a distinction to be made between rushing and moving quickly. You’re more likely to buy the wrong house if you rush. However, you’ve made your decision, it’s important to move quickly when bidding. If you’re unable to make an offer that is not subject to financing, having a true lender pre-approval will help you make the strongest offer possible. It is important to ensure that the lender has everything they require (income and asset documentation), which will position you as a stronger contender. Also, make sure you have all the cash you’ll need for the transaction on hand. If you receive a gift, try to have it in the bank ahead of time.
3. Reconsider Your Options
To be competitive in the face of multiple offers, you may need to submit an offer with no contingencies. Real estate contingencies, such as appraisal, financing, home inspection, home insurance, title, and so on, are intended to protect the buyer, but in a competitive sellers’ market, they can influence whether the buyer wins or loses the deal. Try to be reasonable. A seller does not want to spend time and money on minor repairs that should be the responsibility of the new buyer.
4. Be Accommodating
You may be able to negotiate a better deal with the seller if you can make accommodations, such as being flexible with the closing date. To do so, obtain a mortgage commitment from a lender and notify the seller that you have a loan and can close on your purchase. Consider a residential sale-leaseback if the seller requires more time to leave the home. So, how exactly does this work? The owner agrees to sell the house at a predetermined price. The buyer then agrees to lease the property back to the seller for a specified period of time.
However, there is one thing that is not recommended when attempting to negotiate. In a competitive market, it is better to stand in at the price you are willing and able to pay rather than starting low and hoping to negotiate. Other buyers are likely to make strong offers, and with so many options, a seller will not even entertain a low-ball offer.
5. Make an emotional appeal to the seller
Because many sellers have emotional attachments to their homes, it is recommended that you appeal to the seller’s emotional side. Sellers want to see a family enjoy their home in the same way that they did. As a result, personal letters or even face-to-face meetings with the seller can be extremely beneficial. These strategies also shift the emphasis away from being solely based on price and terms and instead attempt to appeal to the human side of the transaction.
6. Keep Your Emotions in Check
When it comes to emotions, it’s also important that you keep your emotions in check. It’s easy to become discouraged, but staying positive is essential. The vast majority of buyers are in the same boat, but there is a home for everyone.
Don’t give up if it takes longer than you’d like. The timing, price, and terms will eventually work out as long as buyers keep moving the ball downfield’ and learning from previous homes they missed out on.
Ready, Set, Buy
In a seller’s market, buying a home doesn’t have to be a stressful experience. Use the suggestions above to place yourself in the best possible position and maximize your chances of receiving exactly what you desire. Your realtor will be able to guide you through each step and will be a valuable resource. And when you find your dream home, you’ll know you’ve gone above and beyond to get a leg up on the competition.