You can count on the real estate pendulum to swing in two directions: between a buyer’s market and a seller’s market, meaning that market conditions favor one person or the other.
This doesn’t mean you should worry if you’re a potential buyer in a seller’s market. But you must understand the challenges you face so that you can compete effectively and purchase the home you want most of all. Your three top challenges include the potential for:
- A lower inventory. Compound the challenge if you’re looking for a home in sought-after Columbia neighborhood. You can bet these sellers know they have something that people want. Such leverage can give them the upper hand (at least until a skilled real estate agent can help you level the field).
- Higher prices. Simply because they can, sellers often ask a little more (and sometimes a lot more) than they would in a buyer’s market. Less competition makes their home more desirable.
- A bidding war. Fewer homes at already higher prices often lay the groundwork for a duel between at least two people – and sometimes more.
Recognizing these challenges will help prepare you for the journey ahead – and one you’ll be best equipped to champion with a skilled real estate agent from Columbia Real Estate at your side. All of our real estate agents will advise you to take eight proactive steps to strengthen your advantage in a seller’s market:
- Gain preapproval on a mortgage. A letter will prove that you’re a serious buyer who has the financial resources to close the deal. It’s a time-saving step too–for everyone involved.
- Be prepared to move quickly when you find a house that meets your needs – or at least most of them. In a seller’s market, houses move quickly, so time can be of the essence in writing up an offer. It will help to clarify your needs before you even begin looking for a home.
- Begin with a respectable offer. A savvy real estate agent may even advise you to begin with your best offer, especially if competing offers are in the wind. A seller’s market is no time to elongate negotiations or – worst of all – submit a “low-ball offer.”
- Offer a larger-than-usual amount of earnest money. Your real estate agent can help you determine a sum that will convey to the seller that you’re indeed earnest and motivated. A larger sum also could place you at an advantage over competing offers.
- Reconsider contingencies that would normally protect you on such issues as selling your home first, the appraisal and the inspection. Dueling offers, or even the seller’s demand, may force your hand anyway. Lifting contingencies is risky but could be the only obstacle standing in the way of getting the home you have your heart set on.
- Set realistic expectations about the inspection and any ensuing repairs. Buyers in both seller’s and buyer’s markets sometimes misconstrue an inspection as a “to-do” list for the seller. It’s not; it’s meant to disclose serious deficiencies (for which a buyer should compensated). Pick your spots carefully, realizing that sellers in a seller’s market are often less inclined to make repairs.
- Consider making an offer on a home that is “under contract.” To you, it may look like a sure thing, but real estate deals self-destruct every day over a bevy of issues. If you are a “strong buyer,” you could make an equally strong impression over a weak first offer.
- Include a personal letter to the sellers, expressing how much you love their home. It’s called an emotional appeal, and it could be the difference that sets your offer apart from other buyers in a seller’s market. These eight steps should fortify your efforts. So too will working with the most experienced real estate team in Columbia.
Contact us at Century 21 Community and conquer the challenges of purchasing a home in a seller’s market.