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Everything You Need To Know About How to Buy in a Seller’s Market
Anyone who’s tried their hand at the 2021 housing market knows all too well the challenges associated with finding the right home amid high prices and limited inventory. So, we thought this was the perfect time to share tips on how to buy in a seller’s market.
A seller’s market results when the demand for properties exceeds availability. In short, too few homes for sale means higher prices and more competition among buyers. While that is happening right now, and has been for a few months, our main message is don’t lose hope. You can buy a home, even in a market as competitive as this. That’s why we’re sharing insights to give you an edge during your house hunt, from avoiding common mistakes to making the most out of your home search.
- Get pre-approved for a mortgage
Getting pre-approved for a mortgage is essential to buying a home. Most real estate professionals and sellers will not show you a home, let alone entertain an offer, without a pre-approval letter.
The process of mortgage pre-approval should be done carefully and closely with a local mortgage professional. A skilled loan officer will assist in preparing and submitting your application to the lenders who can offer you the right home loan.
This stage is also important for two major reasons:
- You will have a clear idea of how much home you can afford.
- Working with a skilled loan officer can help you get a better quality mortgage.
The last point here is worth its weight in gold. Working with a talented loan officer increases the chances that your application will be presented in the best light, impacting the quality of your loan.
Applying for a mortgage is a great way to learn more about your financial situation and tidy up any potential issues with your credit. It’s wise to use this time to get things in order while following the advice of your loan officer. A local mortgage broker is “Step 1” for anyone interested in how to buy a home in a seller’s market.
BONUS TIP: Our website makes it easy to see how much you can get preapproved for. Click here to apply online quickly.
- Choose an agent who gets where you’re going
The agent you choose is just as important as the mortgage you have. A real estate agent offers indispensable knowledge that will likely carry you over the threshold into homeownership.
Here are a few things to keep in mind when looking for a real estate agent to help you find success in a seller’s market:
- Look for someone with experience helping buyers. Are you a first-time buyer or a current homeowner looking to downsize? Choose an agent who specializes in helping buyers at your stage of life.
- Stay with an agent who knows your price range. It makes little sense to call an agent who lists multimillion-dollar properties to show you homes for $350K. Besides, you benefit more from someone who knows your pricing segment. They know what sellers in this range are looking for.
- Choose an agent who knows the area(s) you’re looking to buy in. If you’re looking in Waltham, it may not be wise to partner with an agent who primarily services Cape Cod and vice versa. Choosing an agent with active knowledge of the market you’re interested in provides a huge advantage. They know the turf, and they know what sellers are looking for.
- Ask about their negotiating skills. Ask your agent about pricing strategies and what a typical negotiation looks like. What’s their success rate been? How confident are you in their ability to help you stand out in a competitive market?
A qualified real estate agent is essential to achieving success during your house hunt. The importance of finding someone who listens and advocates for you can’t be overstated. If you’re not sure how to find the perfect real estate agent, contact us for more information on our trusted professional partners.
- Work your budget, so it works for you
Bidding wars are common in a seller’s market. Do you have enough purchasing power to go the distance?
Here are some ways to maximize your budget so that you can get your offer accepted:
- Look at houses under your budget. Approved for $350K? Why not look for homes starting at $300K? This gives you room to bid higher and overcome other buyers.
- Don’t bid on homes below the asking price. When it comes to conquering a seller’s market, it helps to meet homeowners where they are. They know they have the upper hand, which makes it even more important to carefully select properties that work within your budget.
- Roll up your sleeves with a fixer-upper. Even though prices are high, deals still exist. You may want to think about an as-is home sale that needs some TLC. Depending on how much budget you have left, you could use the rest of your mortgage to make improvements.
- Consider homes that have been on the market for a while. Is there a home you like that’s not seen a lot of action? The seller may be more motivated than their fellow homeowners. Ask your agent about leveraging a home’s time on the market in your search.
All of this is further proves why getting preapproved for a mortgage is so important. Understanding how much home will inform nearly every decision you hope to make while navigating a challenging market, especially when thinking of how to buy a home in a seller’s market.
- Be open to compromise in your offer
Yes, you have a rock star agent. You’re searching within your budget with the perfect mortgage.
The seller is still in control.
Limited inventory means less flexibility for you to negotiate. That’s why it’s imperative to choose an agent with a nuanced understanding of negotiations. With mortgage applications up and inventory holding steady at historic lows, now is not the time to submit offers casually.
Ask yourself the following when making an offer:
- Can I live without that new roof or plumbing repair?
- Is it worth haggling over an extra $25K?
- Am I ready to adhere to the seller’s timelines?
- Do I have enough cash to do home improvements on my own should I have to compromise?
You may not have the luxury of negotiating a home improvement into the final offer like you would in the past. That’s because there are droves of hungry buyers behind you ready to bid just as much while asking for next to nothing. The bottom line is that you should be ready to compromise when submitting your offer.
- Put more earnest money down
Provided that you’ve taken these steps, you may have a seller who’s interested in your offer. Should they accept your offer, you will need to place earnest money down. Typically, the amount needed ranges between 1 – 3% of the home’s sale price.
Offering to increase the amount of money you put towards earnest money down can be a good way to signal to homeowners that you’re serious about buying. Talk with your real estate agent about bidding strategies that can help your offer stand out.
Let’s make it happen
It’s not impossible to learn how to buy a home in a seller’s market when you have the right information. We help buyers in diverse circumstances find mortgages that make sense for them. Are you ready to get a head start to planning your journey home? Reach out to one of our mortgage professionals today, and we’ll come up with a plan that makes sense for your financial situation.