Every seller wants to get the highest price for their home, and each buyer wants to pay the most affordable price for property. But in a seller’s market where the number of homes for sale is low while the pool of buyers is large, a buyer can find themselves constantly stacked up against others to purchase a home. You do have options though. You can either choose to wait for the market to relax somewhat, or else you can jump in. There are ways that you can improve your chances for success, yet still at a reasonably fair price. Here are some ways that you can separate yourself from the crowd:
- Start strong. Most buyers have in mind a price range that they are willing to pay for a home. When you find a home within your price range, you may initially think of offering with a price on the lower end of your range. But in a seller’s market, that strategy may not work. You most likely will be competing against other buyers, and your initial offer may be the only chance you get to buy your home. Therefore, you need to make your initial offer very strong so that it will either be accepted, or at least, considered. You can do that by keeping your offer as clean and tidy as reasonably as possible. For example, eliminate contingencies that are optional, but do keep the ones, such as having a home inspection, that are important. Also, you can offer a larger down payment; this can be seen as a stronger offer as it indicates that you have cash available and that you are more likely to secure the financing you need. Finally, offer the right price, based on the home itself, market, and potential competition. Your real estate agent can help you determine a value that will get noticed yet is within your price range.
- Be flexible. If you have a chance to negotiate with the seller, try to be as generous and reasonable as possible. If they realize that you are truly trying to work with them to find common ground, they will also be willing to work with you. However, if you won’t give an inch, they won’t either, and you will lose the house you want. Ask your real estate agent to estimate the cost of each of the terms that you want the seller to pay, and then subtract it from your offer. This strategy lets you understand the price associated with each negotiable item from the seller’s perspective.
- Know your limits. On the flip side, it is also not reasonable to give up everything you want or offer everything that the seller wants to secure a home. That means you must know your limits. This should include the maximum price you are willing to pay and which conditions you can forgo. You need to do this before you make your offer so that you are not unexpectedly swayed by your emotions during the process.
- Realize that the highest bid isn’t necessarily the best one: In a bidding war, price is certainly a dominant consideration when choosing among multiple offers, but it isn’t the only one. For example, a seller may need to close quickly because they are moving for work, they need access to personal liquidity, or they want to use some of the proceeds for investment purposes. On the other side, the seller may want a long closing to give them time to sell a current property. As well, the amount of the down payment can also affect a seller’s choice. Finally, willingness to fix issues yourselves instead of requesting the seller do so can make your offer look better. Be creative when structuring your offer so that yours warrants a second look. Engage your real estate agent for suggestions and wording.
- Seal the deal: Let the seller know that you are serious about the deal. Let them know when you are pre-approved, act quickly when finding a home inspector, and don’t dally with documents needed to complete the home purchase process.
Awareness and preparedness are two vital aspects to your success when making an offer on a house in a seller’s market. Understand the current real estate market in terms of offerings and prices so that when the right home of your dreams comes along, you will be able to grab it with the best offer you can.