Home buying is often made possible or unreachable due to the local and national economy. Fortunately, what goes up, must come down. So, for buyers who can wait, economic changes in supply and demand can create opportunities. These shifts in real estate are known as buyer’s markets and seller’s markets.
The seller’s market specifically tends to be the harder one for homebuyers. In short, sellers see a lot of demand, so they can command higher prices for a sale. Things are competitive, sell fast, and inventory is low.
For buyers, it’s a headache, but there are ways of handling the challenge.
Understand Your Local Market Better
Many people might throw out the statement locally, “Oh good luck, it’s a seller’s market,” but that’s not necessarily the case until you can confirm it objectively. It may be that certain neighborhoods have high demand, but overall regional inventory is available.
Understanding your local market as a whole and by neighborhood gives a buyer a far better idea of what’s really going on and how to compare homes in different locations.
When Making an Offer, Go With Your Best Offer First
The worst that can happen is someone responds “no.” You didn’t really lose anything with a rejected offer. However, if they accept your offer as-is, then you may have scored a better deal than trying to hedge and bargain down after the fact. Negotiation can be more difficult in a seller’s market, and sellers can be quite motivated to drop a negotiation the instant a second buyer becomes available.
Be Prepared to Move Quick and Bid Fast
Sellers’ markets go fast. Bids are taken in a day and a sale happens the next day or by that evening. If going out to buy, you need to be ready to make an offer on-site. That means also having your pre-approval for financing squared away and having enough liquid assets to cover the down payment along with enough cash to cover closing fees as well. If you’re not wired up already, you will lose sales waiting for your financing prep to get taken care of.
Have Cash, Will Talk
Buyers who are able to show they have the cash to purchase make the process go much more smoothly. Sellers are far more interested in parties who can show they are a firm sale versus those with financing approval still pending.
Known as earnest money, a deposit placed on a home with larger than the minimum amount will get attention and commitment faster than someone with a nice bid but waiting for financing approval, thereby delaying the seller.
Anticipate Non-Cash Sweeteners
Sellers often have interests or desires to meet when letting go of a home. A buyer who can fathom what these are can improve a buying position considerably.
In some cases, it might be as simple as agreeing to additional time for a seller to move out.
In other cases, the seller might have an attachment to the home that they want to keep protected versus seeing it destroyed by a new seller.
Finding these things out can help a buyer make commitments in a sale that make it better for the seller and for the buyer versus other bids.
Sellers’ markets are hard, but there are ways around the challenge and getting into a home you want. By being flexible, creative, and ready you stand a better chance than bidders with half a heart in but one foot still hanging out.