Buying in a Competitive Market
/Everyone thought that the housing market would be slow this year. - that because of the rising interest rates, house prices would drop and the market would finally swing in the buyers’ favor. As we are now in the full spring housing market, that hasn’t become a reality. Houses are still selling quickly, over the asking price, and with multiple offers. As a buyer, this isn’t ideal. There are, however, things you can do to make your offer stand out above the crowd.
1. Do Your Financing Homework
I've written before about the importance of being pre-approved for a loan before you start looking for a home. In a seller's market, this is even more important. When sellers have 2 or 3 or more offers in front of them, a pre-approval letter will tell them that you have done your homework and that you are capable of closing on the house. If the other offers don't have letters you will edge ahead of them. If they have letters and you don't, your offer may fall lower on the list. Also, we can ask your lender to call the listing agent to let them know they are proactive and confident about closing the loan.
2. Educate Yourself on the Market
It's important to understand what houses are worth and selling for in the neighborhood(s) you are searching. The more houses you tour the more you will learn. That is why it's important to get out and look at houses with your agent. It will educate you so that when you find a home that you love and meets your criteria you will know whether or not it's priced well for its condition. You'll be able to make a quick, educated decision so you don't over or under offer for the house. Of course, your agent will know this info too, and can help you learn and make decisions when it's time.
3. Make Smart Offers
In this market, houses are often selling at or above the asking price. Keep that in mind when you find the house you want to buy. This is where your knowledge of the homes in the area and your agent will be invaluable. You and your agent will know if the house you are loving is worth what the seller is asking. If it is and you want a fighting chance of buying it, don't "lowball" the seller. A seller's market is not the time for writing offers on well-priced houses way under the asking price - especially when there are multiple offers. Write your best offer.
Also, consider searching for homes priced under your desired purchase price. If you want to pay $400,000 for a home, consider looking for listings priced at $350,000-$375,000. That way, when you find the house you want, you have the ability to offer more than the asking price because you already know you are qualified at the higher price point.
4. Work Separate from Your Emotions
When deciding how much to offer the seller try to divorce your emotions from the situation. I know this is much easier said than done. This house has the potential to become your next home, the place you will create new memories with your family and friends - of course, your emotions are involved. In the negotiating process, however, it's best if you can separate yourself from that. To objectively see the price and other aspects of the contract will keep you from spending more for the house than you can afford or should pay. Your agent can help with this immensely. Your agent is a neutral party that works for you and can help you see things without rose-colored glasses.
5. Have Your Lender Call the Seller
Once your offer is submitted, have your lender give the seller a call to reinforce the content of your pre-approval letter. This cements to the seller both your qualifications and also the tenacity of your lender.
6. Follow the Above Steps While at the Same Time Remembering the Laws of the Universe.
One of my life philosophies is that you work hard and do your part and what is meant to be will be. Follow the above guidelines and if that house is supposed to be yours it will work out. If you've done everything right and you don't get the house it just means that there is a better house out there waiting for you. I feel a little silly saying it, but I do entirely believe it. I've seen it happen time and time again. One of the best parts of my job is seeing my clients find their perfect new house.
Give me a call and we'll start looking for your next home!