When it comes to the real estate market, there are three basic types: seller’s market, buyer’s market and neutral market. As the name implies, a buyer’s market is when the market favors the buyer, while a seller’s market favors the seller. In this case, the inventory is low while demand is high, allowing sellers to demand higher prices. This also means that inventory moves fast, which means you need to be prepared to move quickly if you want to buy in a seller’s market. To that end, here are a few tips to keep in mind when buying in a seller’s market.
Tip #1: Get Your Mortgage Pre-Approved
Before you begin searching for a home, contact your preferred mortgage lender and get pre-approved for a loan. Pre-approval is different from pre-qualification. While pre-qualification gives you an idea of what you can borrow from the lender, pre-approval ensures you will qualify for the loan while also telling you exactly how much you can borrow. Not only does this give you more confidence when making an offer, but it also allows you and your agent to move more quickly when you find the home you want.
Tip #2: Know Your Wants Vs. Your Needs
As you begin the process of looking for a home, you should have a clear list of those items that you need in a property versus those that you want. Your needs list will help you to streamline the search process while your wants list will help you to make quick decisions when determining if a particular property is right for you.
Tip #3: Be Prepared to Offer More Upfront
When you make an offer on a property, you will be expected to offer earnest money to demonstrate your serious intent to buy. In a seller’s market, the amount of money you put toward your earnest money can be the deciding factor when the seller is looking at multiple offers. Similarly, if you are making a large down payment, make sure the seller is aware of this fact. The more money you have available to pay upfront, the stronger your offer will appear to the seller.
Tip #4: Don’t Hesitate to Make an Offer
If you find a home that you love after your first walk-through, don’t hesitate to make an offer. Some buyers think they need to thoroughly research the home before making an offer, but the reality is that you will have plenty of time to investigate further before you close on the house. After making an offer, you can check on things such as utility costs, the property’s boundaries and other aspects of the property that are important to you. You will also be able to complete professional home inspections to help ensure you are making a good investment. So long as you cancel the contract before the due diligence deadline, which is typically around two weeks, you will not be committed to purchasing the home after making an offer.