Quick Tips for Buyers in a Competitive Market
You might think, given the 2020 health crisis in the U.S., that housing markets would return to normal. However, this has not been the case – housing markets remain red-hot this year.
The competitive housing market makes it more difficult for potential buyers; and it’s simply an issue of supply and demand – there are more people who want to purchase a home than there are homes available for sale.
This mismatch creates what’s known as a sellers’ market. Many owners receive multiple bids, oftentimes for more than their asking price, and homes sell very quickly. Securing a home may be difficult for buyers who aren’t prepared to succeed in this type of market.
So what’s the best approach to buying a home in a competitive market? The most important thing is to be prepared and organized. Have your finances in order and be ready to make an offer as soon as you find a property you like. Keep in mind that you may need to bid above the asking price to have any chance of winning the property.
Here are your tips!
1. Get Prequalified
If you’re in the market for a new home, getting pre-qualified for your mortgage is a crucial first step. It will help you understand how much you can afford to borrow and how much your monthly payment could be.
In order to get pre-qualified, you’ll need to provide your W-2s, pay stubs, bank statements, and some form of identification. The specific list of documents will depend on your personal financial situation and your lender’s requirements.
2. Special Mortgage Programs
There are many different types of special mortgage programs available, such as government-backed home loans, closing cost assistance programs, and low-down-payment mortgages. Your mortgage professional can help you find out if you qualify for any of them.
Be sure and ask your lender about these!
3. Communicate Your Needs
Making a list of your wants can help you decide whether a home that’s for sale meets your minimum requirements. If it does, you may be willing to sacrifice some of your needs to make an offer for that home. If it doesn’t have what you want, you can move on to the next house. By knowing your non-negotiable items, you’ll be able to act faster in today’s competitive environment
If you’re looking for a new home, it’s important to list your needs and wants. Your needs are non-negotiable features you must have in your next home. Your wants are features you’d like to have but would be willing to compromise on. For example, you may need three bedrooms, a home office, or a backyard for your dog. You may prefer a two-car garage, air-conditioning, or hardwood floors, but those extras may not necessarily be deal-breakers.
Knowing what you need and want can help you act faster in today’s competitive environment. If you find a home that has all of your needs, great! But if not, don’t be afraid to negotiate on some of your wants.
4. Open Lines of Communication
If you’re not already working with a realtor, it’s important to find one that you trust and who can stay on top of new listings so they can show them to their buyers as soon as possible. When your loan officer sends you a new listing, try to look at it as soon as possible so you can make an offer if it meets your needs. This way, you’ll be prepared for any scenario and will be able to act quickly when you’re ready to move forward.
5. Leverage Your Home Offer
When you buy a home, there are several ways to make your offer more attractive to the seller than any other offers they may receive.
Making a higher price offer is one way to make your offer stronger, but there are other things you can do as well. Offering to let the seller choose the closing date, for example, can be very appealing. You can also make a bigger down payment, which shows that you’re serious about wanting to buy the home.
Shortening the timeframes for your contingencies can also make your offer more attractive, as can writing a “love letter” telling the seller why the home is perfect for you. However, doing any of these things could also raise concerns among the seller. It’s important to talk with your Realtor about what might be the best strategy for you in each situation.
6. Focus On The End Goal
In a hot market, it’s normal for buyers to lose out on their dream homes to other buyers. If your first offer isn’t accepted, don’t get discouraged. Talk with your realtor and mortgage professional to see what you can do differently next time. Strengthen your offer by modifying your list of needs and wants. This will help you find a home that’s perfect for you.
