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Buyers Guide To A Sellers Market
Surviving a Seller's Market: Buyers Guide
House hunting is challenging enough at any time; shopping during a seller's market is a whole additional difficulty level. The supply of homes is low, demand is high, and sellers are in control.
If you’re not careful, you'll be left drying your eyes with the broken shards of your rejected offer. Sound painful? It is.
In this market, you'd best bring your A-game or don't bother showing up at all. Sounds harsh? It is, but that is the temperature of a sellers’ market
Check out the seller's market survival tips below to stand out from the competition and get the edge.
Know the signs.
Even though you may hear you're in a seller's market, where's the proof? While the market varies based on where you live, you can watch for these two red flags:
1. Houses are selling for more than asking price.
2. Homes sell quickly, and inventory doesn't hang around.Look through our listings for your area.
If most houses have been sitting on the market for more than six months, it's not a seller's market. But if only those ultraluxe properties have been on the market for over a few months, that indicates houses are getting snatched up quickly.
Commit to being on call (literally)
To succeed in a seller's market, you must make house hunting a priority, not just something you fit in here and there on the weekends if you have nothing better to do. If you’re only looking now and then when it's convenient, you're probably wasting your time!
Treat house hunting as if you were job hunting: Scour listings regularly, scheduled viewings immediately, and follow up promptly if you feel it's a fit. Homes are often only on the market for a day or two before the seller is ready to accept an offer. Time is of the essence!
Come bearing paperwork rather than promises.
In hot markets, talk is cheap especially if it's a buyer swearing he has plenty of money for a down payment or will have no problem getting a mortgage. The way to be taken seriously is to show up with hard evidence in hand these claims are true: a mortgage pre-approval letter, plus “proof of funds” from your bank showing you have enough to cover the down payment. That way, the seller knows you can put your money where your mouth is.
Waive the what-ifs (contingencies) But know what you’re doing!
Typically, when home buyers make an offer, they do so only with contingencies. For instance, they'll buy the home if the inspection goes well or if they can secure financing. But in a seller's market, it may behoove you to drop one or two of these caveats to stand out to sellers, who generally would prefer as few hurdles on the way to closing as possible.
Check out our fear factor guide on which contingencies you should consider ditching and which you should keep at all costs. For instance, if your credit history is spotless and you're all but guaranteed to get a home loan, waiving the financing contingency may not be a big deal. But it can be risky to waive the inspection (what if the house has major flaws?) or a title contingency (what if there's a lien or back taxes on the home that now must be paid by you?). Consult with your Realtor®, too, about what's worth the risk.
Don't play hardball. (Its human nature to want to)
In your typical home-selling scenario, buyers make an offer below the seller's asking price, then negotiate upward from there. But in a seller's market, often there is little to no room for price negotiations. In fact, if there are multiple bids, you could end up paying well over asking. So how high should you go? Consult with your Realtor® as this is what they do and they can give you specific insight to how your offer will be taken by the seller.
Don't waste your time lowballing a seller; Always Start with an aggressive offer.
At the same time, you don’t want to blow your budget; you'll still need to make those monthly mortgage payments. Know the numbers! Talk to you Realtor and Lender and know how it will pencil out as this will allow you to make more aggressive offers.
It must be a decision that you feel comfortable making. Bid strong, but don’t overextend yourself financially.
Expand your search area.
In seller's markets, it's not unusual to feel outpriced in your favorite neighborhood. But that may merely mean you need to start scouting farther around. For example: maybe look an “up-and-coming” neighborhood nearby that you hadn’t previously considered.
Sometimes properties sit, even in a seller's market, because of a problem that is scaring other buyers away (IE: an extra five-minute drive from school or some renovation work that needs to be done) might not be such a big deal to you. While such houses may not be ideal for all, finding a house this way can also cut down on the amount of competition you will face, and that means you now hold a few more cards a welcome change in a seller's market.
The preceding was not intended to discourage, but rather inform you of the realities of buying in this market. It is competitive and knowing the ins-and-outs of every scenario is why people hire a Realtor®.
You want as much knowledge and local expertise as possible working for you!
Please contact me anytime for information, consultation or strategic planning.
-Sean Fuller, Realtor®
Sean is a very attentive and educated REALTOR. With a background in finance and experience as a senior loan officer. His clients would describe him as extremely committed to serving their best i....