Tips for buying in a sellers market when it comes to real estate, and how to successfully negotiate when buying a home. When the real estate market changes, often almost overnight, it can catch buyers off-guard.
That’s because shoppers normally have little interest in the market until they make a decision to purchase. A buyer’s strategy needs to be nimble and adjust as the same techniques used in a buyer’s market will be unsuccessful in a seller’s market.
In order to successfully negotiate, buyers need to educate themselves about the real estate market in the specific area in which they want to buy. Buyers need to ask their agent for information about what similar homes have sold for, how much above or below asking prices the homes sell for and what is the average time on the market. A good agent can help buyers understand these facts and how they impact their offer.
Prospective buyers should have their agent contact the listing agent for information about the seller’s needs. Buyers can then prepare an offer that will be attractive to the seller with little countering back and forth. This puts the buyer at an advantage if there are other offers on the table.
Buyers should have their mortgage broker prepare three or four scenarios for them before they start house hunting. These should include the mortgage payments and cash needed to close for each scenario. This will help buyers decide on their price range when it’s time to look at houses and to make an offer.
Homebuyers should be prepared to offer list price or more in a seller’s market. One way to do this is to search in a lower price range from the beginning. This way, buyers can aggressively bid on a house they love without going over budget.
Be ready to offer a larger than normal earnest money; this is very attractive to a seller and can set buyers apart from others. Provide a pre-approval letter from lenders and proof of funds needed to close with an offer. A seller wants to know a buyer can close.
Additionally, be prepared to buy a house as-is. This is not the market to ask the seller to replace the carpet.
Be prepared to make a fast decision. When houses are receiving multiple offers within hours of going on the market, buyers need to be able to make a decision or lose a house that would be a great match for them.
Remember that it’s not always about the money. Buyers should write a personal note to the sellers telling them why they love the house. Sellers love their house and they want to know their buyer loves it too.
Be flexible about move-out times and closing dates. The seller may be facing time constraints and having a buyer willing to work within their dates can make the difference in an offer being accepted or not.
Having a flexible timeline is beneficial. Paying an extra month’s rent or a higher month to month rent will be worth it in the long run, if the buyer is not pressured to make compromises in the house they buy. If buyers are approaching a deadline, they should give themselves plenty of time to look or have a Plan B if they have to make a temporary move between houses.
Patience pays off. It can be discouraging to have an offer rejected or a house a buyer likes sell before they can even make an offer. The chances of this happening in a seller’s market are very high. Don’t take it personally and don’t give up. Keep looking, be prepared and make your best offer.