Buying in a seller’s real estate market can be daunting. With the possibility of high competition for properties, it can be difficult to determine what might put your offer ahead of others. Below are tips on how to negotiate should you be looking to buy a home in a seller’s market.
Sellers have the upper hand when it comes to selling in a seller’s market. Buyers can’t be too choosy, especially when the competition is high. If you’ve found a house and there are multiple offers, don’t make demands that will make a seller turn down your offer. If a seller has made it clear that the appliances are not staying, don’t demand them. If there are cosmetic things you don’t like, don’t make the sale contingent upon those items being fixed. A Realtor will be able to offer advice on ways to make your offer more attractive to a seller.
Prices can get crazy in a seller’s market as well, but do not get drawn into an unrealistic price. Remember, even when home inventory is limited, other homes are or will become available. While there are several online programs to instantly provide a ‘Market Price,’ these draw from general information and can be wildly inaccurate. Make sure your Realtor does a market analysis for each home prior to submitting an offer. There may be a sensible reason to raise your offering price, as well as a good reason to back off. Your agent can factor in expected changes to the area as well as which homes in the area are comparable and which are not.
When it comes to buying or selling a house, finances are a huge part of both transactions. Whether you’re looking to sell or looking to buy, knowing your current financial situation is vital to your next steps. When it comes to buying a property, getting pre-approval for a mortgage is a must, and it’s an absolute must in a seller’s market. You want to be able to negotiate and close quickly. Having a pre-approval letter from a reputable mortgage lender when making the offer shows you’re serious and ready to make a deal. The letter should indicate the lender has already received and approved your credit history and verification of income. It should have only limited conditions, such as ‘continued level of income of buyer’ and ‘satisfactory appraisal of property. Money talks when it comes to real estate. If you’re serious about a property, larger earnest money shows the seller you’re serious and already have money on hand. It makes your offer more appealing!
If you currently own a home, one of the first steps you should complete is researching the equity in your current home. You’ll want to know how much your home will sell for in your real estate market. Don’t be afraid to have an inspection done to understand what repairs or work may need to be done on your house as this will help you understand how much you may need to deduct from the possible sale price or any concessions you may need to make for a future buyer. If you have a mortgage loan, you will absolutely want to know how much equity you have in your home. The equity that has built up could be enough for a down payment on another home. It’s important to remember, though, that any equity is only accessible after closing.
Finding a home when inventory is low can be a difficult task. If you’re on the hunt for a home and live in a city with a competitive real estate market, make the challenge a little less difficult by being prepared!