Buying in a Seller’s Market
Record-low mortgage interest rates and a decline in homes for sale as homeowners continue to deal with the impacts of the COVID-19 pandemic have combined to create a strong seller’s market in many parts of the country. In fact, a recent survey revealed that 42% of homeowners who purchased during the pandemic faced a bidding war.
Of course, real estate markets vary significantly from place to place and even neighborhood to neighborhood. But what if you find yourself shopping for a home in a highly competitive seller’s market? Fortunately, there are ways to prepare for the challenge and strategies that can improve the likelihood of having your offer accepted.
In a seller’s market, there’s a good chance that your first offer will be your only offer. The seller’s ability to consider other offers relatively quickly, if not simultaneously, makes it imperative to start strong. You can’t assume you’ll have a chance to improve your initial offer, especially if it’s well below the market value. Instead, the current owner may prefer to move on and deal with someone they consider to have more serious interest.
Another way to strengthen your offer is to take a proactive approach to your financing. Rather than wait until you’ve found a home that fits you, speak to a lender immediately and begin the prequalification and application process. This will allow you to include your loan status with your offer and demonstrate your ability to complete the transaction.
Find an Expert
The added competition of a seller’s market also makes a relationship with an experienced, informed Realtor even more important. Rather than relying on a personal referral from a friend or relative, commit to doing your research and speak to several professionals before making a decision. You’ll want someone with specific expertise in the type of home or neighborhood you’re pursuing. Partnering with a Realtor who fits with your personality and can accommodate your communication preferences is also critical.
Not only will their skills serve you well when the time comes to make your strongest offer, but a well-connected Realtor may also ease the search for a home in a tight market. Their relationships with other real estate professionals and previous clients could land you the first look at homes coming on the market. They can also advise you on the effectiveness of other tactics, such as an offer letter that serves as a personal appeal aimed at swaying the seller.
Keep it Simple and Flexible
Apart from an attractive offer and the guidance of a talented expert, the easiest way to stand out as a buyer in a crowded field is by eliminating obstacles for the seller. While you probably shouldn’t skip an inspection of the property, avoiding other contingencies can be helpful. Asking for closing costs or making the offer contingent on selling a current home may work against you.
The timing of the transaction could also be a valuable advantage for you. Depending on the seller’s needs, a willingness to close more quickly than other sellers, a delayed closing, or even a lease-back after closing could be enough to move your offer to the top of the list.
To find out how Open Mortgage can help you prepare to make the best possible offer, visit OpenMortgage.com. Our mortgage experts will explore all your options to find the one that leads to your next home.