Gone are the days when buyers had the leisure to peruse listings at their leisure, confident that the seller would accept their offer. Buyers are no longer in a position of power; it’s been transferred to the seller, and this is bad news for buyers looking to close quickly on their dream home. Buying a home in a seller’s market is tough, but not impossible.
Increasing competition among buyers is leaving many stuck on the sidelines, watching homes get swept out of their grasp. Instead of just a few offers, sellers are receiving dozens – 30 or 40 offers is becoming common – affording them the power to raise their prices. In times like these, it’s crucial to know the best strategies. With the proper knowledge, and the right realtor, you will gain a significant advantage over your competition.
Speaking of the “right realtor”, it’s important to work with someone who’s been in the industry long enough to have plenty of experience in this type of market. Be sure that when you’re interviewing realtors, you find one who is familiar with multiple offer situations as well; ask for data and evidence of their success. You’ll also want an agent who has deep ties to the community, knows the town inside and out, and has plenty of connections throughout the area.
Competition breeds bidding wars, and it’s important to know how to win in this situation. Bidding wars are as much about timing as they are about money. Be smart about choosing a closing date, and choose one that will be in the interest of the seller. Try to close quickly as well, because it will save the seller money, which they’ll appreciate.
Sellers will also be more likely to choose a bid if the realtor can provide a quick attorney review and inspection period. Have your important documents ready. Pick an inspector and an attorney well in advance, and have them on standby.
Time is of the essence, so inform your inspector and attorney of the contract before you even submit it. Another way to prove to the sellers how serious you are about the home is to put down at least 5 percent for the deposit. If you’re truly serious, put down 10 percent.
Including a cover letter, or “love” letter, with your offer is an excellent move that many fail to think of. Ask your realtor to help you compose a cover letter that includes a short history of you and your family and perhaps even include a snippet of why you want the house. Consider adding what you do for a living, and how thoroughly your lender has prequalified you.
Being prequalified is essential, but it’s smart to have a little more backup than just that. Sellers will be more inclined to sell to someone who has been preapproved by a bank based upon their income, assets, and credit.
Lastly, it always helps to build a relationship with the seller. Be personable, share your stories, and be friendly with the seller. As with most business transactions, sellers will be more inclined to sell to someone they like.
Although it seems like there’s no end in sight for this seller’s market, stay positive. With the right knowledge, winning a bidding war and landing your dream home isn’t out of reach. Have the right team at your side, inform yourself, and you will certainly find your home.