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Recently, one of our clients was lamenting on how difficult it is to buy a home in today's market. "It's really a seller's market out there!" she exclaimed - and she was not wrong.
"It seems like every time I find a place I like, it's already been snatched up. The bidding wars are killing us," she continued.
They had been house hunting for months and were getting frustrated with their search! This is a common experience in today's market. Home prices are on the rise, inventory is tight, and buyers are competing against each other for properties. Homebuyers are also finding themselves in multiple bidding wars and often losing out on their dream home.
So, how do you navigate a seller's market as a homebuyer?
Understanding "Seller's Market": The Competition
A "seller's market" is when there are more buyers than there are homes available on the market. This creates competition among buyers and bidding wars for properties.
How Does This Impact Buyers?
In a seller's market, there is more competition among buyers for a limited number of homes. This can lead to higher prices, as buyers are willing to pay more to get their dream home. Additionally, sellers have the upper hand in the negotiations. Ultimately, home prices tend to rise and become more favorable to the seller.
The good news is that homebuyers can deploy a few strategies and ensure a win in this challenging market.
How to Win in a Seller's Market
If you're a buyer in today's market, here are a few things you can do to up your chances of winning in a bidding war:
Have a Top-Notch Real Estate Agent on Your Side
This is a no-brainer; you need an experienced real estate agent who knows the ins and outs of the market. They are experts on how to properly price a home, what to look for in a property, and have access to off-market listings.
Get Pre-Approved for Your Mortgage
To be taken seriously by sellers, you need to have a pre-approval letter from a lender. So before you even hit the road searching for your dream home, be sure to get this part squared away. Sellers will be more willing to take up your offer if they know you can get financing. Additionally, having a pre-approval letter in hand will give you a better idea of how much you can afford to spend on a home.
Make Them an Offer They Can't Refuse
You'll need to make a strong offer for you to stand out - something that will get the seller's attention and make them want to accept your bid over others. You should also have a few contingencies accompanying your offer to appear more attractive to the seller.
Be Prepared to Move Quickly
With few houses available, most homes sell within days (or even hours) of hitting the market. So, if you find a place you like, don't hesitate to put in an offer (some people are making offers without even seeing the house). Try not to haggle over minor details or lowball the seller. Instead, show them that you're serious about the property by making your offer as strong as possible.
Connect with the Seller
In a seller's market, it's not just about the money. Home sellers are also looking for buyers who they feel will take good care of their homes. So, take the time to connect with the seller and build a rapport. If possible, write a personal letter to them explaining why you want to buy their home.
Wait Out the Market
If you really want a particular property but feel like the price is too high, you can always wait out the market. Sometimes good things come to those who wait. The market may correct itself, or the seller may become more open to negotiation if their home hasn't sold after a few months on the market.
Why Not Get an Agent Who Will Land You Your Dream Home?
While some buyers may feel comfortable negotiating independently, it's always a good idea to have an experienced real estate agent by your side. A good agent will know how to navigate a seller's market and help you get the best deal possible on your dream home.
If you're looking for an experienced loan officer to recommend to you a real estate agent who can help you win in a seller's market and kickstart your prequalification process, we'd love to help! Reach out to one of our local expert loan officers to start the process of getting pre-qualified.