How to Buy a House in a Seller’s Market
In a seller’s market, there are more buyers interested in purchasing homes than there are homes available for purchase, so competition is fierce. There’s no incentive for sellers to compromise or offer a deal. Instead, the pressure is on the buyer to build a persuasive case for why their offer is the best. Money talks, but the biggest sales price isn’t always what wins the day. Learning what sellers value can help as you master the art of how to buy a house in a seller’s market.
Prepare to Buy
When you’re operating in a seller’s market, the competition is stiff. There’s no room for error, so it’s wise to do your homework before you wade in. U.S. News & World Report suggests preparing by checking that your credit score is in good shape, educating yourself about home loan opportunities, and evaluating potential lenders. Also, take some time to draft a budget. When you do, be sure to leave room in your budget for the unexpected.
Have Your Funding Ready
Sellers don’t have to wait around in a hot market. As Redfin indicates, that makes having your funding lined up imperative. If you can’t swing a cash purchase, get preapproved* for a home loan before you start shopping for a home. Getting preapproved also offers insight into how much you’ll be allowed to borrow, which can help you set your budget for house shopping. Plus, it provides an opportunity to discover and work out any unexpected kinks with your credit or documentation that might cause trouble with the loan process when there’s less pressure. You don’t want to lose a home over a preventable issue.
Choose an Experienced Real Estate Agent
An experienced real estate agent is an essential ally, according to Trulia. They have the contacts to alert you to new listings immediately, which is vital when homes are selling almost instantly. In addition, they have the expertise to assist you in crafting the best offer possible.
Start With Your Best Offer
The Balance notes that sellers in a highly competitive market generally get multiple offers for their property. As a result, the would-be buyers whose offers are rejected normally don’t get a second chance. That makes starting with your best offer the only way to succeed. Offer a solid price, and keep the contingencies as simple as possible. Don’t ask for any favors from the buyer, but consider extending a few to the seller to sweeten the deal. Could you delay taking possession for a few days? Are you willing to rent the home back to the seller for a while?
Brace Yourself for a Bidding War
Bidding wars can be scary, but seller’s markets are a likely time for them. Trulia urges homebuyers to be ready. One way to defend your budget is by choosing homes with prices well below your budget’s ceiling. This strategy gives you room for the price to rise. If the price exceeds your limits, you may have to decide whether to walk away or extend your budget.
Be Patient and Persistent
According to NerdWallet, homebuyers in 2020 generally searched for eight weeks and looked at nine homes. In the second quarter of 2021, 66 percent of active homebuyers had been searching for more than three months. One-third of those buyers reported that their dreams of homeownership had been foiled by being outbid. Clearly, buying a home in a seller’s market isn’t easy. It takes planning and persistence, and a bit of luck won’t hurt. However, if you really want to own a home, it can be done. Check that your expectations are reasonable, put in the effort, learn from your mistakes, be patient, and keep trying until you succeed.
*All loans subject to credit approval and identification of acceptable property. Conditions and restrictions may apply.