FAQ - What is a Seller's Market and How do you Navigate it as a Buyer?
by Rick Cox
on Thursday, April 30th, 2020 at 1:41pm.
A seller's market is most notably marked by a lack of inventory. Less supply=sellers' market. Despite Covid-19, we are finding that we are still in a sellers' market. The number of days on market is generally very few, and in the lower price ranges in particular (under $300k), sellers are receiving multiple offers and homes are selling for over list price. As a buyer, the way to navigate this is to put yourself in the best position possible to compete in a situation where there may be multiple buyers attracted to the area and price range where you are looking. Some ways to do this are to -
Once you have made the decision to look for a new home, get started in the process. If you are looking for a specific type of home or area, practice patience and make sure to do your research - tour open houses and monitor home searches. It can be very helpful for you to reach out to a realtor to discuss what you are looking for, and they can then set you up with some searches. They will also be very resourceful as they have a full-time ear in the market and can let you know as soon as what you are looking for pops up.
Get pre-qualified by a local lender. Sellers prefer to see someone local who they can speak to about the strength of the potential buyer as opposed to an online qualification. Especially if you are a first-time homebuyer, it is very important to put together your proof of funds and pre-approval, to initiate the process and overcome any bumps in the road that could limit you from purchasing your dream home when the time comes.
Try to save as much money as possible to put down. Sellers prefer that you have some "skin in the game", particularly with respect to closing costs. If you can make an offer where you are not asking the seller to pay for all or some of the buyers' closing costs, that is more desirable to sellers.
Remove any contingencies prior to presenting an offer (ie: if you have a house to sell, you are better off getting it under contract before putting in an offer on something else, especially a "hot property")
Be mindful that homes in a sellers market won't wait around too long. If you find the home that meets your criteria, move on it and work with your realtor to strategize.
Be prepared for multiple offers and work with your realtor to help you come ahead. Ensure you are placing a fair bid and not risk completely losing an offer by low balling the seller.
Be flexible with your closing date in order to accommodate the seller. Be ready to close as quickly as possible if that is an issue for the seller.
If all else fails, ask your buyer's agent about the possibility of adding in an escalation clause to an offer or waiving the first several thousand dollars of possible repairs on inspection items.