While buying the house of your dreams is tricky at the best of times, a seller’s market adds a whole other layer of difficulty to the transaction. Lack of upfront cash is often the biggest problem facing buyers in this scenario, as most sellers want to seal the deal as quickly and effortlessly as possible.
But while there isn’t much you can do about your finances (or lack thereof), not all is lost.
Here are five ways you can give yourself an edge in a hot seller’s market.
Streamline Your Offer As Much As Possible
If you’re buying in a seller’s market, chances are you’ll be competing with at least some all-cash offers. This can be a challenge. Nine times out of ten sellers will go with an all-cash offer, simply because it’s a quicker and easier close.
With that being said, this doesn’t necessarily mean you’ll lose out. You can still give yourself a fighting chance by streamlining your offer.
Try saving up as much as possible before you start viewings, as this will allow you to make a larger down payment. Lower down payments complicate life for the seller, which lowers the chances of your offer being accepted. Even putting down 5% instead of 3% can make a huge difference.
It’s also a good idea to get your financing lined up before you make the offer. Go to the seller bearing the right paperwork, rather than just promises and assurances. Talk is cheap, so a mortgage pre-approval letter and proof of funds can go a long way towards making your case for you.
Even better, research lenders’ reputations; and go with one that’s known for closing quickly. This not only shows the seller you’re serious about purchasing the property, it also reassures them that closing will go smoothly, which buttresses your position as a serious buyer and gives you a further edge on the competition.
Be Prepared To Compromise
The less you ask for the stronger your offer, because closing will be much quicker and easier. This will require some compromise.
While it’s not unusual to ask for at least a refrigerator and washer-dryer in real estate transactions, you should consider not asking for them at all. Minimizing the amount of personal property you request builds your case that selling to you is just as easy as accepting an all-cash offer. In general the less contingencies your offer has, the cleaner it is, the less the seller has to consider. You should also avoid asking the seller to bear part of the cost for inspections and appraisal, for the same reason.
In fact, why not take things up a notch?
Find out what the average closing time is in the area and try to offer a deal that would result in a faster close. Most sellers are eager to be done with the transaction; and the prospect of a fast close is sure to tilt the balance in your favor.
Understand You Can’t Play Hardball
At least some negotiation is typically par for the course in real estate transactions. Unfortunately, though, this simply won’t fly when you’re buying in a seller’s market. There’s rarely any room for negotiation under these circumstances, because the seller often has their pick of offers.
Of course, this doesn’t mean you have to ditch your budget and get yourself into a full on bidding war. However, you do need to be strategic. Ask your real estate agent to do a bit of digging, so you can better understand the state of the market in the area and what houses are typically going for. Sometimes, even as little as $1,000 over asking can do the trick.
More importantly, be patient. Don’t settle for just any house. Make sure you’re in love with it and can see yourself living there for the long haul. This will make it much easier to up your offer when it’s time to bid.
Add A Personal Touch
While it won’t overcome a huge difference in price (especially if your offer is significantly lower than other offers on the table), adding a personal touch is a great trick to have up your sleeve. In fact, it might just make the difference between having your offer accepted or rejected.
The reason for this is simple – you’re building a connection and making yourself stand out. And standing out is crucial when you’re competing for the same house against several other people.
Best of all? It won’t take longer than five minutes to do.
Simply write a brief email to the seller introducing yourself and your family; and say why you love the house. Don’t be afraid to capitalize on your personal circumstances, either. Let the seller know you’re a first time buyer, or explain that you’re looking to start a family. Sharing your story warms the seller up and adds a feel-good factor to the transaction.
Even better, reassure the seller that you love the property and will take good care of it. The seller is sure to appreciate this; and chances are you’ll be the first name to pop up when it’s time to decide which offer to accept.
Get A Real Estate Agent You Can Trust
Finally, don’t underestimate your real estate agent’s role.
The skill and expertise of your real estate agent is especially important in a seller’s market. Not only will they hear about the hottest listings first, they’ll also be able to advise you on how to put your best foot forward and make your offer stand out. As well the reputation of your agent can sometimes be as important as your offer, as the listing agent and seller both want a deal that will not only close, but will be smooth. They know the buyer’s agent can help or hinder this greatly. So, pick an agent that not only has the knowledge to guide you, but has a highly professional reputation in the industry.
Don’t settle for the first real estate agent you find. Choose wisely.
Need help buying your dream home? Talk to us today.
About the Author | Chris Makowski
Buyer & Listing Specialist | Broker / Realtor® NC/SC
Chris epitomizes integrity, reliability, and enthusiastic hard work in every detail of your real estate transaction. Chris comes from a family of Realtors beginning with his grandparents on down to his mother, and a few other relatives mixed in there as well. Growing up around the real estate culture helped to instill in him the work-ethic, diligence, and patience needed to thrive in this ever changing industry.
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