You want every advantage you can get when you buy a home. And it can get tricky on the seller’s market, as the inventory is low and there is a lot of competition for the available homes. But how are you going to make sure you have the right house and the best price when you’re shopping in a vendor’s market? It comes down to a bit of skillful real estate know-how— including a smart tactic to put yourself ahead of other investors.
Sale Market vs. Consumer Market
The only thing you know when you’re interested in buying from a seller’s market is the exact business environment you’re going through. More sellers are shopping for houses on the seller’s market than homes for rent. This means that there is a lot of competition for more property and that the seller has more leeway when it comes to asking for price and negotiables.
Alternatively, the demand for sellers is where there are more houses for sale than sellers. In these terms, consumers have more control, and sellers often have to make compromises to gain money, such as reducing the selling price or giving away a few bonus advantages.
The real estate market cycles through two stages throughout the year, which means that the purchaser’s outlook can be very different from one season to the next. But if it’s the manufacturer’s demand, and you don’t have the ability to wait, you’re not out of luck.
6 Tips for buying in the market of the seller.
Buying in a seller’s market doesn’t mean you will have to overpay your home, just as selling in a buyer’s market doesn’t mean you’re not going to get a good deal on your property. But if you’re buying when demand is high, you will have to get out of the competition if you want to score a desirable home. You may also need to work some flexibility on your strategy in terms of closing requests and negotiations.
With that in mind, follow these six tips to put yourself in the best position possible during your home search.
- Get your financing in place before you get started.
It would be best if you were ready to act quickly on the seller’s market, which means that you don’t want to wait for mortgage approval or find out whether a particular home is in line with your budget.
Get a mortgage quote before you even begin your search, and do the math for what you can afford as a monthly payment. It may be tempting to seriously up your offer on the seller’s market to compete — especially if bids go up in a home that you love — but knowing what your spending limits ensure that you don’t buy more home than you can afford. It also provides its competitive advantage, as sellers are usually more likely to go with a buyer who is already a sure deal in terms of financing.
- Be prepared to act quickly.
There is no time for dilly-dallying when you buy in the market of the seller. From scheduling to counter bidding, you need to be on the ball and ready for action. Homes on the seller’s market can fly off the market in as little as a day, and there’s no guarantee that a home you’re interested in today will be available tomorrow. If you hesitate, you risk missing out on what might have been a great purchase.
Of course, being ready to act doesn’t mean jumping on the bandwagon. It’s still important to make wise and informed choices because buying a home is one of the most significant investments you’ll ever make.
- Know precisely what you want (and don’t want)
If you’re trying to act quickly, you’re going to need to know right off the bat what crosses the right boxes for you and what doesn’t. This includes main features such as size, number of bedrooms and bathrooms, and how many vehicles can fit in the garage. It also refers to prospective vendors. Are you ready to buy a home that needs some work? What about a house that adds time to your everyday journey?
Knowing what you want, what you can deal with, and what you can’t live with will help you close your homes quickly during your search. It also means that when you find the home that suits the bill, you won’t have to think twice about whether you can go on.
- Don’t over-complicate your proposal.
Asking pricing appears to be higher in the vendor sector, with reduced inventory rising demand and raising the underlying worth of what is available. Just because you’re going to spend extra, but that doesn’t mean you can necessarily bargain for more in exchange.
For the best chance at an agreed bid on the seller’s market, try to make it as straightforward as possible by reducing the contingencies as much as you can. Contingencies (which are those conditions that must be met before the sale will take place, such as the need to sell the existing house first) cloud the waters of the deal and give buyers less faith that the transaction can eventually take place.
Though certain contingencies are always appropriate (you certainly shouldn’t forfeit your right to back out after a significant finding during the inspection), asking for too much could cause the seller to write you off in favor of a better offer automatically. The same goes for things like calling with longer closing hours or concessions on any home renovations.
- Soften the negotiation
Much as an over-complicated bid can theoretically put a vendor off, a sweetened deal will instantly make you the most desirable bidder. Forms to do this like buying at or above the selling price, calling for a shorter closing date, or throwing more serious money down.
Both home purchases typically require some compromise on either the customer or the seller (or both). Showing that you’re ready to spice up your bid makes it evident to the agent that you’re sincere and can make a difference between seeking a home immediately when you’re shopping on the seller’s market and stretching your search time for weeks or months.
- Make it a personal matter.
All or most contacts with the seller are by the respective agents, so it’s convenient for there to be a feeling of distance between the parties on either side of the transaction. Buying and selling a house, though, is a very personal operation, and often it can be useful to bear in mind that there is a particular person you’re trying to deal with.
A personal letter sent to the seller along with your bid humanizes you and seeks to build a connection and an emotional bond. So if your home seems like a great place to raise your new infant, or if it’s situated near the ice cream store where your grandparents used to take you, remember that! And if you have nothing too concrete to say, a personal letter explaining how much you love your home will only serve for you.
Prepare, Set, Purchase
Buying a house on a seller’s market doesn’t have to be a highly frustrating experience. Follow the advice above to put yourself as best as possible and further maximize your odds of getting exactly what you want. Your real estate agent will be able to guide you on any step of the way and will be a valuable resource to focus on. And when you find your dream home, you’ll know that you’ve done everything you can to get the market’s advantage.
