When it comes to buying a property, getting pre-approval for a mortgage is a must, and it’s an absolute must in a seller’s market. You want to be able to negotiate and close quickly. Having a custom pre-approval letter from the mortgage lender when making the offer shows you’re serious and ready to make a deal. The letter should indicate the lender has already received and approved your credit history and verification of income. It should have only limited conditions, such as ‘continued level of income of buyer’ and ‘satisfactory appraisal of property.
Understand the Market Value Range:
Prices can get crazy in a seller’s market, but do not get drawn into an unrealistic price. Remember, even when home inventory is limited, other homes are or will become available. While there are several online programs to instantly provide a ‘Market Price,’ these by nature draw from general information and can be wildly inaccurate. Make sure your real estate agent does a market analysis for each home prior to submitting an offer, and if you receive a counteroffer, it is a good idea to have your agent do it again. There may be a sensible reason to raise your offering price, as well as a good reason to back off. Your agent can factor in expected changes to the area as well as which homes in the area are comparable and which are not.
Avoid Low Ball Offers:
A seller’s market is not the time to make a low-ball offer. When there are fewer homes for sale, buyers tend to submit higher and full-price offers. Your real estate agent will be able to guide you on an offer that will not only entice the owner but also compete with other potential offers.
Show You’re Serious:
Money talks when it comes to real estate. If you’re serious about a property, larger earnest money shows the seller you’re serious and already have money on hand. It makes your offer more appealing!
Don’t Expect Everything:
Sellers have the upper hand when it comes to selling in a seller’s market. Buyers can’t be too choosy, especially when the competition is high. If you’ve found a house and there are multiple offers, don’t make demands that will make a seller turn down your offer. If a seller has made it clear that the appliances are not staying, don’t demand them. If there are cosmetic things you don’t like, don’t make the sale contingent upon those items being fixed. Your real estate agent will be able to offer advice on ways to make your offer more attractive to a seller.
Use Knowledge To Your Advantage:
One way to negotiate with an offer is to learn more about the seller. Does the seller need extra time to vacate the property because s/he is waiting on another property? Use that to your advantage and allow that time in your offer. Is the property on the market because the owner must take a job in another city or state? You can make the closing quick to help accommodate his/her needs.
Finding a home when inventory is low can be a difficult task. If you’re on the hunt for a home and live in a city with a competitive real estate market, make the challenge a little less difficult by being prepared. When you finally find that perfect property, do not forget the asset you have in your real estate agent. Together you’ll be able to make a deal that gets you your dream home.