When home inventory is low, prices tend to rise and trying to buy a house in this type of market can make the already overwhelming process of buying a home even more difficult. Get through the home buying process with as little stress as possible Buyers in a Competitive Housing Market can follow these 5 tips:
Figure out a budget and stick to it. Before even beginning the process of finding a home you like, you should always receive preapproval from one or more lenders to determine the amount you’re qualified to borrow. Then, only after considering the additional costs of homeownership like taxes, utilities, and insurance, figure out a final budget. And then stick to it. Often times when listings are limited, bidding wars can make prices rise considerably, and if the price surpasses your budget, you should be prepared to walk away. There is always another home.
Identify desired neighborhoods and home wants versus needs. When housing inventory is as limited as it is, you may need to be prepared to compromise what you “want” in a home. Create a list of wants in addition to a list of needs and then lead your home search with the list of needs. That’s because certain wants, such as stainless appliances or hardwood floors, while great to have, can be added later; whereas a quality school district or a spacious yard cannot, therefore, those desires that cannot be added later should be taken into account first.
Be ready to make quick decisions. In a seller’s market, homes rarely stay on the market long, so when a house that is within budget and checks off your list of needs comes along, don’t wait! You should come ready to submit an offer quickly so you don’t risk a competing offer being accepted before the seller even has a chance to consider yours.
Bid competitively and limit contingencies. It is always tempting to start off with a low offer, but in a seller’s market, you should be prepared to lead with your highest offer to avoid losing out on the home because a higher offer came in first. It’s a competitive market right now and it’s important to be prepared to bid that way. That being said, in multiple bidding situations, it’s also important to remember that it is not always the highest offer that is most likely to be accepted, but sometimes it’s the one with the least amount of contingencies. Remember, it’s a seller’s market which means that it’s important to be flexible by removing restrictions related to the sale, including things like a move-in date. Lower bids can win against a higher offer if you make it easier, more attractive or more lucrative for the seller to choose you.
Work with a realtor. It is important to work with a Buyer’s Agent who is familiar with the areas and neighborhoods that you’re considering. Realtors should be your most trusted resources for real estate information. Find one that you trust and that has experience with and knowledge about the communities around you; they can provide you with advice that just might be the competitive edge you need to get the home of your dreams. A Buyer’s Agent will know how to structure your offer to make it as competitive as possible to increase the chance for you to be the winning bid.