Your home is one of the biggest purchases (and investments) you’ll ever make. It can also be one of the most stressful, particularly when it comes to buying a home in a seller’s market.
Here are my top 5 tips for buying a home in a seller’s market:
1. Position yourself to instantly make an offer by getting a pre-approval
When it comes to buying a home in a seller’s market, timing is everything (particularly with competing offers on the table). Getting a mortgage pre-approval will send a clear message to the seller that not only are you highly motivated to buy, you’re also ready to close the deal.
Tip: Look for properties selling for $10K to $15K less than the amount of your pre-approval. This will keep mortgage costs comfortably within your budget and give you room to negotiate, should you find yourself in a bidding war.
Keep in mind that a pre-approval does not guarantee that you will be approved for a mortgage. Once you have a specific home in mind, the lender will want to verify that the property meets certain standards before approving your mortgage. If certain conditions aren’t met, the lender could decide to refuse your mortgage application, even though you had received a pre-approval for a certain amount.
2. Don’t wait too long to make an offer
Any hesitation in a seller’s market means you’re probably bidding adieu to the property you set your sights on. Then again, as an educator, you should know all about the laws of supply and demand. With more potential buyers than homes in this scenario, you need to be prepared to make an offer and fast.
Tip: When it comes to making an offer, you might be tempted to come in below the asking price. However, low-balling in a seller’s market might not be the best strategy. With a shortage of inventory, the competition tends to be fierce. If you really want that property, come in with a strong offer, right from the start.
3. Don’t make your offer too complicated
If your offer is filled with contingencies (i.e. a home inspection, the sale of your own home, etc.), the seller may view these as potential roadblocks to selling. If another buyer doesn’t have any of those conditions and a similar price offer, chances are the seller is going to accept the one with the least amount of hassle. Instead, carefully review your clauses and remove the ones you can live without. Adopting the whole ‘less is more’ approach will ensure your offer has a fighting chance.
However, be cautious not to sacrifice your peace of mind just to secure a piece of property.
Choosing to waive an inspection, for example, means you’d be agreeing to buy the home, no matter what kinds of problems may exist. This could be a very costly compromise. While flexibility is key to getting an offer accepted in a seller’s market—at the end of the day, you need to weigh just how flexible you’re willing to be.
4. Be prepared for a multiple offer scenario
When there are multiple offers on the same property, you may find yourself in a good old fashioned bidding war. To be the last person standing, you need to pull out all of the stops in order to come out on top.
5. Be responsive & flexible
It’s important to be responsive during the negotiation process and be flexible with your closing date to make sure your offer is more appealing than others.
To ensure you don’t miss out on the property you want, get in touch with me at 780-288-0643. From mortgage pre-approvals and tailored advice to insight into the home buying process, I can help you every step of the way.
Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors