Tips for Buying Property in a Seller’s Market
In 2020, there was a supply shortage of 2.5 million housing units. With a lower supply and an increased demand for property, we are now in a seller’s market. This often leads to increased prices and stiffer competition for buyers, which can intimidate any potential property owner — whether or not this is your first home purchase.
The heightened competition of a seller’s market can feel even more challenging in an infamously fast-moving real estate market like New York’s. Rather than give up, take the time to prepare yourself so you can put forth the best offer possible. Here are some tips for navigating a seller’s market.
1. Prepare Your Paperwork
Step one, of course, is getting all your ducks in a row. When things are moving fast, it’s essential to have what you need to act decisively when you find a listing you like.
Before investigating available homes, ensure you have all the necessary documents in place. One of the first things you want to do is get a preapproval letter from a mortgage company. The document states the mortgage amount you’re pre-approved to borrow.
Know the difference between the types of loans available. The limits on these loans depend on housing prices. Having this information ready shows the seller you can afford the house. Also, being prepared helps you stand out from other buyers and allows for a quicker process especially in the midst of a housing shortage.
2. Set a Budget
With houses leaving the market fast, you may feel pressured to make a higher offer. However, if you go too high, this could cause you future financial strain.
Before house hunting, determine your budget and stick to it. This can help prevent you from making quick decisions that aren’t in your best interest.You might accelerate your buying timeline, but you shouldn’t sacrifice on your financial wellbeing for a property.
3. Work With the Seller
With multiple buyers viewing the property, sellers may feel overwhelmed. To make a good impression, be open when picking a date to tour the home.
Figure out what time is best for the seller. For your benefit, see if you can tour the property around 8 am or right after regular work hours. This can give you a better idea of what the traffic will look like during your typical commute — and it’s more likely the seller is available at those times, too.
Also, be more flexible about your move-in date. Give the seller plenty of time to move out of their house. If you can afford to be adaptable, the process can be a win-win for both parties.
4. Make House Hunting Your Full-Time Job
With homes leaving the market quickly, your search should be a top priority. Regularly search for houses online and around your desired location. Check local listing sites, such as Zillow. You could also look for unlisted homes. To find these, send emails or letters to homeowners asking if they’re interested in selling.
Of course, your real estate agent is in your corner, too. Their insider knowledge of up-and-coming listings will give you a market edge that’s simply hard to achieve if you’re not in the industry yourself.
Also, when setting up a tour, book the earliest time available. Getting in early can give you more time to make a decision. As soon as you find your dream home, work with your real estate agent to follow up with the seller.
5. Make Fewer Requests
When buying a home, you most likely have a list of features you want to include. However, with a more competitive market, you may need to be more flexible. So, consider holding off on asking for an updated washer or a lower price. Instead, accept what the seller is offering upfront.
You can always revamp the cosmetics of your property later. Make an essentials list — location, schools, price, etc. — and try to cut out anything you can afford to adapt later. While it’s great to find a dream home, buyers sometimes get caught up on small details that can slow them down.
6. Reach Out to a Listing Agent
A listing agent represents the seller and is the one who lists the property for sale. So, reach out to them to learn more about the home. A listing agent can tell you how many other buyers are interested. Knowing this information can help you make a more competitive offer/
7. Start With Your Best Offer First
Since a seller sees multiple offers, it’s essential to make a good impression right away. If you wait to give a better offer, the house could leave the market before you even get a chance to make it.
So, ask your real estate agent to do a comparative market analysis. Use this information to help you determine the fair market value for your home. Also, keep in mind your budget. You want to have enough money saved for closing costs.
8. Offer More Cash
To make your offer stand out further, increase the amount of cash for your earnest money deposit. An earnest money deposit is cash a buyer provides that is held until the sale closes. It is usually between 1-10% of the sale price. The funds are applied toward the buyer’s down payment and closing costs.
Having a higher offer can show the seller you are invested in the property. It’s also more likely to be a necessary component of a competitive offer. In Upstate New York, where city buyers are snatching up available real estate, brokers report about half of their deals being completed as cash-only offers.
9. It’s About More Than Just the Money
Price is one of the more critical factors for sellers, but it’s not the only one. Consider sweetening the deal with a non-financial offering. Consider waiving the home inspection or extending their move-out date.
Offering more than just money can be incredibly useful if you’re on a budget. It can also make your offer stand out, even if it’s not the highest price.
10. Write a Personal Offer Letter
Your offer letter should appeal to the seller’s emotions. Talk about how you envision living in the house. You can even bring in elements of the home. For example, discuss how you will maintain some of the original architecture.
Also, learn more about the homeowners to find a common connection. You could even shoot a short video showcasing how much the property means to you.
Moving Fast in a Seller’s Market
Navigating a seller’s market can be a little stressful. With low supply, buyers are experiencing more competition and even bidding wars. The tips above can help you get prepared, be more decisive and utilize all your resources to make the home search a success.
Author
Evelyn Long is the editor-in-chief of Renovated. Her real estate work has been published by the National Association of REALTORS®, Rental Housing Journal, and other online publications.
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