Buying a Home in a Seller’s Market: 9 Tips for Success
March 6, 2013
Buying a home in a seller’s market can be stressful and pricey for the buyers. It can be a frustrating process full of disappointments and you’ll probably want to forget the whole thing. But with a bit of preparation and planning, it can be successful and rewarding: concluding in you enjoying living in a new home.
I’ve put together nine tips I think make all the difference for a positive outcome. These are tips I’ve gathered through experience working with both buyers and sellers and from witnessing the processes that make deals happen.
- Hire an awesome real estate agent. You make think this is a shameless plug for the profession, but I believe your odds of success greatly increase when working with a pro. Notice I said AWESOME, not just any agent. When buying a home in seller’s market, you will need to act quickly, be well educated, and have professionally written offers. An agent who knows the area and the local agents will help you find a home and advise you on the right offer.
- Learn the process. Don’t wait until the day you find a home you want to learn the process of writing an offer and buying a home. It can be a steep learning curve. Know what you will need to do and how much it will all cost ahead of time. If you follow step one, your awesome agent should provide a thorough education.
- Get pre-approved. I don’t want to hear why you haven’t done this yet. If your agent is nagging you about this, good! The mortgage process is more elaborate than a few years ago, so get your ducks lined up and marching. In a multiple offer situation you will likely need to present a pre-approval letter and not having it ready can make the difference between acceptance and rejection. Regardless of how strong you know your finances are, the seller will not know and a pre-approval is the only way to communicate it.
- Prepare for some disappointments. When buying a home in a sellers’ market, it is likely you will have a rejected offer along the way. I met a couple who gave up on searching for a home when their first offer on the first property was rejected. This is a mistake. Don’t fall into the emotional pitfall of turning a disappointment into a defining moment and base decisions on it. Move on, keep going, expand your horizons and know it was not the right property for you. But if you continue to lose to better offers, it’s time to change strategies.
- Start the process early. Want to move in September? Start looking in March….you should have started weeks earlier. With low inventory and more competition, the search takes a while. Furthermore, a long closing may be highly valued by a seller who still needs to buy a new home. Let’s go!
- Find flexibility. Find your strengths as a buyer. Do you have a great knowledge about construction and plan to fix things? Then don’t be picky after inspection. Do you have lots of cash? Maybe waive the appraisal contingency or offer a larger down payment. Are you flexible to move anytime? Make it known. A flexible closing can make a big difference for some home sellers who need to move in a particular time frame.
- Know your weak spots. If you have a 3-5% down payment, you may have a tough time competing against some of the investors paying cash for properties. The questions is: how to overcome those weaknesses? You can offer more money, tight mortgage contingency timeline, etc. An offer to purchase real estate has many elements to it, and you need to know your strengths and weaknesses, and how to work with them.
- Brush up on your writing skills. A short note goes a long way. I often advise buying clients to write a personal note addressed to sellers telling them a bit about themselves and why they like the house. You’d be amazed how a personal connection means more than a couple thousand dollars in some situations. And it can make a big difference when two offers are very similar.
- Ask your agent to present the offer. I admit to overlooking this detail sometimes, but having a buyer agent present the offer is another great way to make the connection more personal. It also ensures the sellers receive your perspective when the offer is presented rather than the listing agent’s editorial remarks.
Was this helpful? Find more helpful tips to strengthening your negotiation power when buying a home in a seller’s market in my blog.
Ruth Lerner is a Brookline Realtor specializing in Brookline, Mass., Chestnut Hill, Mass., Brighton, Mass. and West Roxbury, Mass. real estate. Since 2002 she’s represented both buyers and sellers with a post-transaction satisfaction rate of 97%. You can contact her on her website, and find her on Google+, Facebook, LinkedIn and Twitter.