If you’ve been looking to buy your dream home this summer, you’ve likely noticed that most of the country is in a seller’s market. Homes are selling quickly, there’s little room for negotiation on price, and there are probably multiple purchase offers for each house. But this doesn’t mean you can’t buy your dream home now. There are a few strategies to get your first offer accepted in a seller’s market, and we’ll share them with you.
By definition, the housing market is considered a seller’s market when the demand for houses exceeds the supply. That has certainly been the case throughout the summer of 2020. The onset of the pandemic this spring delayed the start of the summer real estate cycle, which helps explain why the market shows no signs of a traditional fall slowdown. Record low interest rates and a shift from urban to suburban or rural living also contribute to the steady demand for houses.
Industry professionals have noted that homeowners have been are less willing to sell now, during the pandemic, but renters want to buy because the low interest rates can make it more affordable to buy than to rent. Because of all this, if you’re looking to purchase a new home now, you should be armed and ready with the following tips.
An experienced Real Estate Agent will be your competitive advantage in a seller’s market. Experienced agents will know when a home that fits your criteria is listed for sale, which will give you the ability to see it early.
Real Estate Agents also have essential knowledge and experience with negotiations. There might be multiple purchase offers on the table in a seller’s market, so you need a good negotiator on your side.
You should also be preapproved for your mortgage and submit a preapproval letter with any offer. Being preapproved shows the seller you’re serious about your offer and ready to buy the home. It also signals a faster loan closing, which many sellers prefer.
If you see a home and know you would be happy in it, you need to act quickly to submit an offer. If you take too much time to think it over, you’ll likely lose the property to another buyer. This doesn’t mean we’re advocating for you to make a rash decision. But go into the buying process knowing what you want and ready to act when you see it.
You also need to make sure your purchase offer is an attractive one. In a seller’s market, there usually isn’t room for negotiation on the purchase price. If you submit an offer lower than other offers that come in, there’s little reason for the seller to consider yours. So be prepared to submit an offer that may be at or above the asking price.
Additionally, you want to make sure your offer is a clean one. Don’t ask for concessions like seller-paid closing costs or an extended closing date. These special considerations weaken a purchase offer, making it less competitive and unlikely to be accepted.
Be ready to put as much as you can down for your earnest money and down payment because more money down signals to the seller you’re prepared to buy. More earnest money also ensures you won’t change your mind after the seller has accepted your offer, which provides peace of mind for the seller.
When you submit your purchase offer, include a personal note or letter explaining why the home is perfect for you and your family. Sellers are often attached to their property. Maybe the house has been in their family for generations, or perhaps they invested time and energy in remodeling the home. For whatever reason, the assurance that you’ll love and care for the house can be the deciding factor when there are similar offers on the table.
If your agent is confident there will be multiple offers on the home you want to buy, then adding an escalation clause can be a good idea. Escalation clauses stipulate the price you’d like to pay for the home- or your actual offer. But they also outline how much more you’re willing to pay for the house if there are multiple offers on the table. In other words, an escalation clause does the bidding for you before a bidding war even starts.
Escalation clauses are helpful in terms of making your offer the most attractive offer, but they also show the seller that you are an earnest buyer who wants their home. Not just any home.
A contingency clause gives you the right to back out of a home purchase contract for specific reasons. Common contingencies clauses include home appraisals, home inspections, financing, and an existing home sale. In a buyer’s market or even normal market conditions, contingencies are common and expected in purchase offers.
However, in a seller’s market, you may need to waive some or all contingencies. For instance, it’s highly likely your purchase offer will not be accepted if you have a financing or sale of an existing home contingency clause in it. Waiving an appraisal or home inspection contingency is less common, although it is sometimes done to win a bidding war.
As you prepare to submit an offer, one final piece of advice is to be flexible. The more flexible you are the greater the chance you have at getting the deal.
Getting your first offer accepted in a seller’s market can be easier if you follow those tips. But we can make the whole process even easier than that. You don’t need to ask your friends for recommendations to find a trustworthy Real Estate Agent or a shop around for the best mortgage lender. Our free Real Estate Concierges will manage the entire process for you.
From connecting you with loan officers and introducing you to a vetted Real Estate professional, to answering all of your questions along the way, our Real Estate Concierge team will make the whole process simple and enjoyable.
If you’re starting your home-buying process and want to learn more about our Real Estate Concierges, you can learn more here.