In many cities and neighborhoods around the country, it’s a seller’s market. The National Association of REALTORS officially declared there was a housing supply shortage and homes are starting to sell fast and for high prices. While it’s great to be a seller in this market, it is tough to be a buyer. However, it doesn’t mean there isn’t a great house out there for you to purchase; it just means your buying strategies must change to reflect the current market.
If you are looking to buy a home, be it your forever home or an investment property, don’t let a seller’s market scare you. This isn’t the first seller’s market, and it certainly won’t be the last. A number of my students have asked, “Marko Rubel, should I just wait out the market until I have the upper hand?”
While this largely depends on the individual’s situation, a seller’s market doesn’t mean you have to wait. If you are in the market for a home now, you can certainly proceed, but be aware of the key elements of smart home buying tactics in a seller’s market:
Check Your Credit in Advance
Before you even start looking for a home, check your credit. Even 12 months isn’t too early to start getting your finances in order before buying a house. By checking your credit early, you can ensure that there aren’t any mistakes that are lowering your score. It takes time to correct issues such as these, so don’t delay.
Along with checking your credit, get preapproved by a lender before looking at houses. Not only will this confirm what you are able to spend on a home, it also eliminates a huge step in the process. Furthermore, being preapproved is attractive to sellers because they know you are prepared and serious about buying.
Stay Within or Under Your Budget
In a seller’s market, gone are the days of making a lower bid on a home and scoring a deal. Not only will prices be higher, but in many areas there are multiple offers on homes. By looking at homes at or above your budget, you may have to still offer more to get the home. Don’t waste time and energy on making an offer only to realize you don’t have the funds to outbid another buyer.
Look For Potential
While this is more common with first time home buyers, don’t assume you can find your perfect dream home within your budget. This is especially the case in a seller’s market. This doesn’t mean you have to settle for a home you’ll never love; but it does mean you may have to use your imagination and overlook the small problems, such as stained carpet, old wallpaper, and loose door knobs. Focus on finding a good neighborhood and a home that has a solid foundation.
Be Ready to Move Quickly
In a seller’s market, homes sell quickly and, in particularly competitive neighborhoods, homes can sell within the first few days of being listed. If you see a home you would seriously consider buying, talk with your realtor about making an offer. Don’t dwell and think about a house only to find out someone beat you to the punch.
Make a Competitive Offer
A seller’s market is not the time to make lowball offers. Before you submit an offer, get an idea of what neighboring homes sold for recently. Your realtor should be able to give you an estimate of what the home is truly worth. From there, make a competitive offer. If you bid too low, a seller may not even come back with a counter offer; they could just say “no.” In this competitive market, there is a good chance you will have to be at or above listing price, so keep this in mind when making an offer.
If you are ready to buy a home, don’t let a seller’s market scare you away. It’s still possible to find a great home, but you do need to be ready to face a few challenges. However, by being prepared and having a strategy ahead of time, you can confidently navigate the market!
(from Huff Post)