If you’re looking to buy a house, right now couldn’t be better for several reasons, but you should also know that it is currently a Seller’s Market. Buying a home in a Seller’s Market can be a little bit trickier than buying one in a Buyer’s Market.
What is a Seller’s Market?
Well, quite simply, it means that there are more buyers who are looking for homes to buy than there are sellers with homes to sell. This creates a situation where two things happen that really need to concern buyers:
- House prices go up. This is a simple effect of supply and demand. The more demand there is for any product means that its price will increase. Same thing with a house. Homes prices have been increasing in the last few years (especially for single family homes) and this is one of the reasons why.
- Houses go quickly. Depending on the type of home you’re looking to buy, and the price range, houses can go very quickly. A well-priced home will almost go under contract within a week or two. This means that inventory (the number and types of homes available) becomes unavailable very quickly and this can become very frustrating for buyers.
So what are some tips towards having a successful buying experience in a market where home prices are increasing and are snatched up quickly? We have you covered:
Be Ready and Know What You’re Looking For
If you really need or want to buy a house, but you don’t know what you’re looking for, then you’re going to get chewed up and spit out. You do not have the luxury of slow “window shopping” in a seller’s market. You may take a while to find the right house, but once you do, you need to be absolutely prepared to move on it quickly.
You need to have a pre-approval and a letter confirming your buying power ready to go. When you get to the house that you want to buy, you will want to make an offer quickly. Having a pre-approval letter is crucial to your ability to move on a home quickly.
Be Ready for a Bidding War and Know Your Limit
As we said before, well-priced homes in a Seller’s Market are scooped up quickly. Really well-priced homes sometimes end up going for much more than their original asking price.
How does this happen? Bidding wars!
This occurs when more than one buyer puts an offer in on a house at the same time. The sellers then sit back and watch as the buyers compete with each other and raise the price of their home without the seller lifting a finger.
In this situation, you may need nerves of steel, but it helps if you know exactly what your limits are before you submit the first offer. It can get intense and emotional. Don’t let it get out of control. Talk to your realtor about strategies to deal with homes in this situation.
Make Your Offer More Appealing
Believe it or not, but there are other aspects a seller may consider when weighing one buyer over another than just their offer price. It’s true.
Now don’t get us wrong, price is important, but there are other ways to make your offer stronger than your competition.
One way to do this is to offer cash instead of a loan. If that’s not possible (and we know for most it isn’t), there are many ways you can make sure your loan is more appealing than others. Work with a well-known lender. If it’s possible, try to do a conventional loan instead of an FHA. (These are not bad loans, but they can give some seller’s pause when they see them.)
Offer shorter inspection periods and a quicker closing date (of course, only if the house looks to be in good shape and you can work it out with your lender to close as quickly as possible). There are other things you can do to be prepared to buy in a seller’s market. For more information or tips on purchasing your next home in Palm Beach, please contact us!