In follow up to my March column, we are continuing the frantic pace of this seller’s market. At times home buyers can feel hopeless when competing and losing out in a multiple offer situation. Here are some tips to help you navigate through this home buying season:
Get Pre-Approved – By obtaining a pre-approval for a mortgage before you start your home search, you’ll know how much buying power you really have. Not only will a pre-approval give you a good price range to work with, it can also make a seller more likely to choose your offer. In the perspective of the seller, they are faced with multiple bids; but pre-approved offers typically stand out from the rest because it indicates a buyer is prepared and ready to buy, with no uncertainty that may cause the sale to fail later.
Choose a Sharp Real Estate Agent – While it’s already difficult to navigate a real estate purchase without a real estate agent in the normal markets, it’s going to be extremely difficult to get the house you truly want without a great real estate agent in a seller’s market. You should be looking for an agent that not only has proven their expertise of the local markets, but someone who is highly responsive, efficient, and will work hard for you to get the home you select at the right price.
Establish Price Discipline – If and when a bidding war happens, it’s very easy to get carried away. Before you start shopping around for homes, set firm and realistic limits for yourself on how much you’re willing to spend. In this competitive seller’s market, it is likely you’ll need to make quick decisions and it’s much easier when you have an agreed upon price in mind before going into these situations.
Don’t Be Too Picky – When the demand for homes is high and inventory is limited, it may not be the best time to be looking for your “dream home” that checks all of your boxes. Unless you are able to wait until later to buy, you should prepare yourself to adjust your expectations. However, don’t make exceptions to your criteria for things that can’t be changed. For example, you can renovate the kitchen or add on another room, but you can’t change the home’s location or lot size.
Forget About Lowball Tactics – In a buyer’s market, you could possibly get away with submitting an offer that’s well below the asking price. But in a seller’s market, that tactic will be nothing but a waste of time for you and all parties involved. Competing buyers often bid above the initial asking price to ensure they will get the home. So if you want to stay in the game, your bid should be close to, if not higher than, what the seller’s asking price is. Talk with your real estate agent about the best bidding and pricing strategy.