Looking for a house is an exciting time, it can also be a stressful time. If you are shopping for a home in a seller’s market, listings can be scarce and competition can be fierce. It doesn’t matter if you are a first-time homebuyer or shopping for your 4th home, shopping in a seller’s market can be a frustrating and disappointing experience. The good news is, there are things that you can do as a buyer that will prepare to be the strongest buyer you can be.
Having a strong, competitive offer is only one part of being a successful buyer in a competitive market. Below are some tips that will help you conquer the unforgiving landscape of a seller’s market.
- Save, save, save – Cash is your greatest asset when buying a home. Even if you choose to use financing that requires nothing down or a low-down payment amount, your savings will come in handy in off-setting concessions for closing costs. Your offer can be made stronger if you can cover your own closing costs. It also makes the offer more attractive as a concession can raise a purchase price and that can mean trouble when it comes time for the mortgage appraisal. Cash is king! The more you save the more you will be able to play in a competitive real estate market.
- Get financing in order before shopping – Speaking with a loan officer can help sort out finances and identify the right financing for you. It’s also expected that you are pre-qualified before beginning your home search and going on showings (open houses are the exception to this, they are open to everyone). Having a pre-qualification means your finances have been reviewed and you are ready to roll as soon as you find a home. It also helps set your budget; it stinks when you find the perfect house, only to find out that you can’t get a mortgage to purchase that home. Knowing your financial limits will help you narrow down your options in the market.
SIDE NOTE: There are many fantastic mortgage companies in the Capital Region with great products. I have worked with many of them and I have yet to come across one that I have had a bad experience with. However, I would be remiss if I didn’t take a moment to give a shout-out to 2 awesome loan officers at HUNT Mortgage – not just because it is a HUNT affiliate company* or because they are my office colleagues, but they both rock at their jobs. Bob Tuttle & Pat O’Connor are great guys who have helped several of my clients purchase their homes. They bring an enormous amount of experience to the table which has only benefitted my clients, and myself. They take time to educate buyers and are wonderful communicators, making the process smooth and keeping everyone in the loop. Additionally, HUNT Mortgage is now providing a Pre-Purchase Commitment that commits to loan approval for a buyer with the only condition being a home passes the bank appraisal. That means a buyer can offer on a home and show their financing is ready to commit as soon as an appraisal is approved. A pre-purchase commitment, along with an attractive monetary offer, shows a seller that you are a serious buyer and want to own their home. It can make your offer stand out in a multiple offer situation as well.
- Be realistic on what your budget will buy you – If you find yourself in a seller’s it may limit your buying power for something that meets your needs. Even in a buyer’s market you may have to reduce wants ex) you get 2,000 square feet, 4 beds and 2 baths, but you will have to put in some elbow grease to make that diamond shine. If you are looking for a steal in a seller’s market chances are your low-ball deal might fall flat. Consider reviewing your wishlist and defining what your needs versus your wants are. You might also want to investigate some other areas or neighborhoods that can provide you with the same conveniences or atmosphere you are looking for at a more wallet-friendly price. At least you are widening your inventory pool giving you more options to consider.
- Be ready to write an offer – A market with lots of buyers and few listings can be a nightmare if you are one of those buyers. New listings may not last long before going pending. Heck! I had one receive multiple offers in less than 24 hours back in October (2017)! The market is not going to wait for you to make up your mind and there is a lot of truth to the realtor.com® “Not You” commercials – the you may nail down the house, but look at all those not yous that lost out. Don’t be a not you.
- Brace for disappointment – It sucks to lose out on a house. As an agent, I hate it when my clients get beat, I truly feel the blow. It’s easy to get discouraged, but it happens and it can happen more than once. This includes buyers with above average budgets too. Remember to breathe when things get overwhelming. When you can’t even get past the finding a home phase it can be frustrating. Be prepared to face a loss when buying in a seller’s market, hopefully, your offer is accepted without a hitch, but you will be ready for the news if it doesn’t.
- Learn from your mistakes –So, your first offer situation didn’t go according to plan – what now? Talk with your agent; ask questions about what went wrong and what you should do next time. They are there to help guide you, good communication with your agent will only lead to success. Every offer is different because every home and buyer are different. Learn from each failed offer to better your next one.
No matter who the market favors, buying a home is an adventure. If you find yourself shopping in a market that favors sellers, be the strongest buyer you can, be prepared to fail, and learn from your mistakes. Surround yourself with a team that can guide you on your journey – your agent, your loan officer, and your attorney should all have your back through your purchase. Be prepared, be competitive, and be confident; you will find yourself a winner in a high-stress market and nab that perfect home!
Erin Miller is a Licensed Real Estate Salesperson with HUNT Real Estate ERA in the Clifton Park, NY office. She is also a member of the National Association of REALTORS® . Erin enjoys working with buyers to find their perfect new home. If you are looking for an agent to help in your Capital Region home search, contact Erin, and check out her reviews on her website at www.homeswitherinmiller.com
*HUNT Mortgage is an affiliate company of HUNT Real Estate ERA. There is no obligation to utilize the services of HUNT Mortgage in order to work with a HUNT Real Estate ERA salesperson. The opinion on the services of HUNT Mortgage and the mentioned loan officers are those of the writer and in no way imply any client is required to work with this lender.