Home buying success in a seller’s market might seem like a long-shot in the U.S.’s hottest real estate markets, but there are things you can do to increase your chances of success in both finding and buying your dream home.
We just read the headline Seattle leads nation in home-price-growth 10 straight months.Home prices here have risen by 13.4 percent for June 2017 compared to June 2016. And the race wasn’t even close; Seattle’s nearest competitor in the race, Portland, saw home prices increase just 8.2 percent over the same period of time.
Since our offices are located in one of the most competitive home buying markets in the U.S., we thought it was time we shared some tips for home buying success in a seller’s market. In fact, Seattle’s home prices are up 78 percent from their low 5 years ago and now sit nearly 20 percent above the previous bubble’s average:
- $750,000 Seattle median home price
- $860,000 Eastside median home price
- $337,700 Washington State median home price
We hear it all the time; a home buyer found what they thought was their dream home, in their dream location, at a price they could afford. Only when they submitted their offer, they discovered that someone else (and often several “someone else’s”) had beaten them to the punch. Dreams dashed, they now must essentially go back to the beginning and start their home search all over again.
6 Ways to Increase Your Chances of Home Buying Success in a Seller’s Market
Get Mortgage Lender Pre-Approval Before Looking at Homes for Sale
And we’re not talking about an estimated pre-approval amount, either. Your offer on that new home will be its strongest when you have mortgage pre-approval with a reputable home mortgage lender. This letter tells the buyer that once they accept your offer, you’ve got the financial resources to get all the way through to closing, on time.
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Looking at available homes without mortgage loan pre-approval in a seller’s market could be a waste of time. Chances are that by the time you talk to your mortgage lender, if there’s a home that checks off a lot of boxes for you, someone else – someone with mortgage pre-approval – will have already submitted an offer.
As the saying goes, he who hesitates is lost. When you do find a home for sale that is a good fit for your needs and preferences, MOVE. Make sure you’re working with a realtor who is happy to write up and submit an offer on your behalf on short notice. Who wants you to “win” the home as much as you do!
Make Competitive Offers
The days of low-balling home sellers or asking for too many concessions are over. When you find a home for sale that you really want, make an offer that reflects your desire. Even if the seller isn’t currently entertaining other offers, if you go in too low they may decide to wait for another buyer, even if you subsequently raise your offer.
This is a great reason to work with an experienced real estate agent. They understand the market and can run reports that either support the seller’s pricing or tell you where your offer needs to be. Keep in mind that in a seller’s market, home sellers sometimes price their homes purposefully below market value, knowing it will spark interest, lots of showings, and (what they’re really hoping for) multiple offers.
Know Your Limit
If you’re dead-set on a property and involved in a bidding war with one (or even multiple) home buyers, decide what your limit is in terms of price and concessions (for instance, if you’re bidding higher, do you need sellers to leave appliances?) at the outset and stick to it. You have to be prepared to walk away, knowing that however perfect the home seemed, it wasn’t the home for you. Don’t let a desire to win at all costs leave you paying more for a home than its value, or stretched beyond the comfort limits of your budget.
Leave Wiggle Room
Since bidding wars are frequent in a seller’s market, it might be smart to look at homes priced somewhat lower than your pre-approved mortgage limit. This gives you room to maneuver and an advantage over buyers who are shopping at the top of their budget.
Buying a new home in a seller’s market can feel like an emotional roller coaster ride. One day you’re making what seems like an endless climb to the top, the next minute you’re on top of the world, and then come all the ups and downs likely to occur before the ride comes to a full and complete stop, and you get the keys to your new property.