How to Buy a Home in a Seller’s Market.
*continuation of yesterday's blog Why Are Existing Home Sales Tanking?
According to the National Association of REALTORS® “Attempting to navigate a home purchase in this type of market can make the already complex process even more overwhelming.”
I take issue only to NAR’s use of the word ‘overwhelming’. It’s your agent’s job to make sure the process is NOT overwhelming and if they’re doing their job it won’t be. Your Realtor has seen up markets, down markets, bubbles and bursts, short sales and foreclosures, Seller’s Markets like this one, and the inverse Buyer’s Markets. There is a smart and appropriate procedure and rules of thumb to suit every market condition.
To help buyers successfully navigate the process in a tight inventory market, NAR and local Realtors offer these suggestions:
Determine and stick to a financial plan. Get pre-approved by one or more lenders to determine your mortgage amount. Calculate costs of ownership such as taxes, utilities and insurance, and make an allowance for maintenance, to determine your housing-cost comfort zone. When listings are scarce, bidding wars can drive prices up, so home buyers must be prepared to walk away if the final asking price surpasses their budget.
Identify neighborhoods, and your wants vs needs. When housing inventory is limited, you may need to adjust your take on wants and needs. Want stainless appliances or hardwood floors? Need to be within your child’s school district or close to work? Some list items can not be the subject of compromise, other things can wait.
Be ready to act quickly. In a seller’s market, homes may only be on the market for a matter of days. When you find a house that is in your price range and meets all of your needs, be ready to submit an offer quickly, and may I stress here… a fair offer, or you could risk losing the home altogether.
Bid competitively and limit contingencies. It is tempting to start with a low offer as a way of feeling the seller out. But in a seller’s market it’s often wiser to submit your best offer right out of the gate. Your Realtor will know when and if it’s appropriate to handle it in this way. It is also important to remember that in multiple bidding situations it is not always the highest offer that is most attractive to the seller, but the one with the fewest conditions. Flexibility in regards to closing date and contributions can be a point in your column.
Work with a Realtor®. The market is a local animal, so it is in your best interest to work with an agent who is familiar with the areas and neighborhoods you are considering. Realtors® are the most trusted resource for real estate information and have unparalleled knowledge of their communities; they can advise buyers on the competitive advantages needed in a tight market.