Buying a home or property can be one of the most stressful tasks one will ever undertake. In a seller’s market, this stress level goes up tenfold. What makes a seller’s market? A seller’s market is when there are more buyers than housing because the inventory of homes for sale is down. Sellers can be reluctant to sell a home for a wide variety of reasons. They don’t own enough equity in the home, or they are underwater. Selling a home can be as stressful as buying one so some people just don’t want to bother. Still some sellers are concerned about where they end up next because once the house is sold, they join the ranks of the too many buyers. For whatever their reasons, buyers have to learn the three Be’s of buying in a seller’s market.
One aspect of a seller’s market that most buyers do not realize, or even believe, is how fast the market moves. In a seller’s market, a decent house with attractive pictures online will attract numerous showings the first few days on the market and will often have multiple offers within a week. Buyers need to plan to move quickly the first day a property comes on the market. They should instruct their agents to set up showings immediately. Buyers should work with their employers to let them get off early in order to go see the house before dark sets in. Once a home is found, the buyers should not wait too long to get an offer into the seller. Sometimes it is not the highest offer that gets selected, it is the first offer that gets it. In a buyer’s market, you can relax and think over all the various aspects of the home, checking things off your list and really analyze how much to offer on the home. In a seller’s market, buyers no longer have the luxury of sleeping on the decision. You have to get the offer in within hours of finding a home. Once the offer is received along with all the other ones being submitted, the seller will then have to decide to either select one of the offers presented, or do a call out for final and best offers by a certain time and date. If a final and best offer is called for, you then have to decide if you want to proceed to determine your best offer, because they rarely give you more than a day.
A seller’s market is not a nice market. It does not care that you only want to offer asking price on a house. It does not care that the seller is the one that usually pays for things like surveys, home warranties or title policies. A seller’s market will expect instant gratification and expect to call all the shots on the pace and process. A seller’s market will expect immediate satisfactions with a high offer that does not require further negotiation. After all, if your offer does not give them everything the seller’s market is demanding, it will just wait for an offer that will. Buyers need to be aggressive with their offers. I recently put in a full asking price offer on a house and the listing agent told me he would add it to the two other ones they just received. It is a whole different ball game in a seller’s market. You should not expect to get any assistance with closing costs and even offer to pickup some of the costs that traditionally fall to the seller like survey and title policy. Don’t make the closing date too far out either because there will be offers that say they can close in 30 days. Check with your lender to get the quickest turnaround that they can give you. Speaking of Lenders, the stronger your preapproval letter is, the better your offer will be received. A prequal letter really does not hold much strength against a letter with full preapproval. What is the difference? A preapproval means that an underwriter has given your file a preliminary glance to see if you are credit worthy. A prequal letter does not check anything beyond what the loan officer is told over the phone. In other words, buyers need to be aggressive in getting approved for a loan.
Buyers in a seller’s market have to learn to be flexible with their wish list and desire for the perfect home. Of course, buying a home and getting a mortgage will be the largest purchase most people will make in their lifetimes so you don’t want to just pick one in order to get a home. However, you might want to consider only getting a portion of your wish list and be able to move on a home that might not be a 100 percent perfect. If the wish list has any cosmetic things on it, like a certain paint color or a certain type of flooring, you might need to let go of these things and do them yourself once you have gotten the home. If you don’t want to be flexible with your wish list, you should wait until the buyer’s market comes back around. Flexibility also extends to your schedule. You might have to sacrifice a evening of television watching to get to a showing on a home recently on the market. It is also advisable to be flexible when going on the showings themselves. You might have to wait in line to see the house as seller’s market will drive many people to adopt the Three Be’s so you can get crowds at showings.
In summary then, you need to learn the three be’s of buying a home in a seller’s market. You have to move fast on seeing homes and then getting the offers to the listing agent. The offers should be aggressive to make your offer stand out from the crowd. Finally, be flexible! You might not get a 100 percent of the things on your wish list.