Heading into the spring market, we thought we’d share our best advice and strategies for buyers who will be navigating a seller’s market. Yes, the strong seller’s market in our area has continued into 2021, so house hunters, prepare yourselves accordingly!
Line up an Experienced Agent
The first step in successfully navigating a seller’s market is to find an experienced Realtor. Be sure to select one who has a good working relationship with other local agents. A well-connected Realtor often hears of properties long before they come on the market. Additionally, a well-respected agent will give the best advice on how to compete and may even tip the scales in your favor in a multiple offer situation.
Begin your house hunt by scouting various neighborhoods, testing commutes, and checking out the local shopping and dining. In a hot market, you’ll want to know exactly where you want to be so you can jump on a property as soon as it’s available. See our post on doing your due diligence as a buyer.
Decide Where You’re Willing to Compromise
Relatedly, based on this “window shopping,” you should have developed a good sense of your “must-haves” and your “nice-to-haves.” You should also know what level of work you’re willing to undertake in a new home. Also, consider potential compromises in terms of location. For example, are you willing to live on a busy street if it’s in your dream neighborhood? Are you willing to live in a smaller house to have a shorter commute?
Be Financially Ready
When you begin house hunting in earnest, be “offer ready” at all times. It’s essential that you have the necessary paperwork (mortgage pre-approval, proof of funds for the down payment, etc.) in hand. In navigating a seller’s market, you may have to act same-day and you’ll want to have all of your ducks in a row! You will also want to make sure you are using a lender who has a great reputation with local Realtors, who can move quickly on appraisal and financing contingencies and settlement dates if needed.
Make The Offer
As you put your offer together, consider the maximum amount you’re willing to pay, what compromises you’re willing to make, and how flexible you can be on timing.
That said, money usually talks the loudest! Sellers are most often motivated by the largest possible profit on their sale. We always work with our buyers to determine what makes the most sense for them. If possible, make a cash offer or a significant downpayment.
In hot seller’s markets, buyers will often remove contingencies from their offers. For example, the buyers will waive the right to a home inspection or securing a mortgage commitment. These strategies can be effective but are not right for every buyer. Try to keep your offer as “clean” as possible — within your comfort zone. There are ways to protect yourself while reducing or removing contingencies that a Realtor can help you through, keeping in mind that each situation is different.
For some sellers, time is key. Sellers might accept a slightly lower offer to get the deal done quickly or alternatively if they need to stay longer in the property. For vacant properties, speed is always important. See if you can put in an offer that would close more quickly than 30 days; a quicker closing might just be a tiebreaker in your favor. Insider tip: using a lender that has an established relationship with your real estate agent often helps ensure a quick closing. Often, however, the seller may wish to stay in the property for a longer period of time. The ability to offer a rent back can make the difference between winning and losing.
Make Your Plan for a Potential Bidding War
Decide now if you’re willing to engage in a bidding war. Many buyers simply decide not to engage in any sort of bidding war. They go in with their best offer and let the chips fall where they may. If you do decide to engage, have a very clear sense of your upper limit before you begin.
Be Willing to Learn — and Move On
If your offer is not the winning one, don’t give up hope. Debrief with your Realtor, adjust your strategy if needed, and move on. Be open to learning lessons from each offer. We often see clients lose out on their “dream home” only to find an even better home soon after. In fact losing in multiple offer situations isn’t the worst thing in the world. Read more on multiple offer situations here. Keep the faith that the right home is out there waiting for you!
The Bottom Line
In navigating a hot seller’s market, it’s easy for buyers to get overwhelmed and discouraged. To land the home of your dreams, it’s so important to do your research in advance, get your finances in order, decide on your negotiation strategy and comfort zone, and be resilient. You will end up in the home you’re meant to have.
We’d be happy to help you land your new home. We have nearly 90 years of local real estate experience, navigating markets of all kinds. Please reach out today and let’s get started!