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Although house hunting in a seller’s market might make you feel like you’re at a disadvantage, it doesn’t mean you can’t make the steps to buying a house an easier process for you.
Nationally we’re currently seeing the market shift toward the sellers’ favor. This may make potential buyers hesitant to house hunt. However, other trends, such as lower interest rates, mean the market condition isn’t the only factor that can impact your chances of finding the home you want for an affordable price. If it’s the right time for you to buy a house, the condition of the market shouldn’t deter you.
Armed with the right understanding of the market, the seller’s perspective, and confidence in what you can afford, you can successfully buy a house in a seller’s market, rather than waiting for the perfect conditions.
Let’s dig into understanding how a seller’s market can affect the home buying process, as well as the steps to buying a house in a seller’s market.
What it means to buy a house in a seller’s market
A seller’s market means there are more buyers than there are sellers, so demand is higher than the supply of homes. This can happen, for example, when fewer people are selling their homes or in a specific location that is particularly popular for people to live.
In this market, it may seem like the seller has the upper hand in the transaction. However, as a buyer, it’s not always ideal to wait until the market shifts or to purchase in a location that has a different market. By understanding how a seller’s market affects the purchase of a house, you can take simple steps to find and buy the house you want.
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Remain flexible and act fast
House hunting in a hot market involves both patience and quick action, which could require some flexibility on your part.
As you diligently monitor houses going up for sale, showings may pop up unexpectedly and things will move quickly from there. Start your research early to gather as much information as possible about houses you’re viewing. Show up to showings ready to buy and have clear communication with the seller or their real estate agent about submitting an offer.
As you make contact with sellers, consider what you can compromise on for the sale of the home. You may need to reduce contingencies you would have in a more balanced market. Consider the trade-offs of buying a home now in the location you want, compared to waiting longer to get exactly what you want.
Provide proof that you are ready and able to buy
When you find a house you want to make an offer on, take steps based on the perspective of the person selling it. They’re likely receiving other offers and will only respond to the best ones. They’ll also be making their decision quickly.
In some markets, you may only have a day or two to submit an offer after you’ve viewed the house. Confirm the offer deadline with the seller’s agent to make sure you submit yours on time, or better yet, submit it before other offers come in at the deadline.
To show you’re a serious contender, include proof of financing for a down payment and documentation for your mortgage pre-approval.*
Getting your finances in order also benefits you, because you’ll know exactly what you can afford while shopping for houses so that you can quickly decide whether you’re ready to make an offer.
*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation which has not been reviewed by Underwriting. Final loan approval is subject to a full Underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.
Make a competitive offer
Determine what you can afford and make a strong offer that motivates the seller to work with you.
Consider what will stand out to a seller who is receiving multiple offers and wants to not only get the best price, but also have the smoothest transaction.
If you can purchase the house with cash, for example, this speeds along the process of waiting for a mortgage to be finalized. If you’ll need a mortgage, consider other ways to stand out. Can you make a higher offer than the asking price? Can you be flexible with your closing date?
It may also help to include an offer letter to make a good first impression. Compliment the seller on their home, show them why they should accept your offer, and try to make a personal connection with them so that you stand out as more than just paperwork from another potential buyer. Add details about advantages you provide as a buyer, such as quick turnaround time for inspections or how lenient you can be with other contingencies.
How can you make the most competitive offer?
A loan officer can help you come up with a specific strategy based on the market where you’re shopping for a home, your timeline, and what you can afford.
Reach out to us to get started. We can help you get pre-approved for a mortgage so that you know what you can afford and can confidently make a competitive offer when the right house becomes available in a seller’s market.