10 Tips for Buying a House in a Seller’s Market
When there are more buyers than homes for sale, you have what’s called a seller’s market — where prices rise, properties are hard to come by, and sellers have the upper hand.
Obviously, it’s not the ideal time to buy a house. But is it impossible? Not by any means.
Are you buying a house in a seller’s market? These 10 tips can help you be successful.
1. Know what you want.
Time is of the essence in a seller’s market. Homes sell fast, and you need to be ready to act fast. To do this, you’ll want a good handle on the specs you’re looking for — things like number of bedrooms/bathrooms, amenities, location, school zones, etc.
This will allow you to quickly recognize suitable homes when they hit the market, so you can schedule a tour ASAP — or, in some cases, potentially even submit a bid sight unseen. This is sometimes necessary in a super-hot market.
2. Get pre-approved.
You always want to get pre-approved for your mortgage before starting your home search, but it’s even more important when you’re buying a house in a seller’s market. A pre-approval letter gives sellers more confidence in your offer, showing that you’re a safe bet to follow through on the purchase. It may even help you win out over other buyers in a bidding war. Or, even better, you could get Approved to Move™ — a fully underwritten approval that’s basically the same as cash to buyers.
3. Include a personalized letter to the sellers.
Another letter you might want to include? That’d be an offer letter — a personalized note written directly to the sellers of the house. Include what you love about the home and why it’s the right fit for your family. You could even include a photo if you’d like. Often, knowing a bit more about your circumstances can help a seller choose your offer over another’s.
4. Consider an escalator clause.
An escalator clause is something you include in an offer, saying you’re willing to pay more for the house if another buyer outbids you. It’s a good way to ensure you’re always the top bidder, without going over a certain threshold. Just talk to your agent if you want to consider an approach like this.
5. Do your research.
Always research the neighborhood before submitting an offer. You want to make sure your offer is in line with what other properties are going for in the area, not only for appraisal reasons but also to avoid over- or under-bidding. Your agent can help you do this step.
6. Make a good-sized earnest money deposit.
The amount of earnest money you put down reflects your intention to buy the house. Since you lose the money if you back out of the deal, putting down more cash shows you’re serious about the property — and it could be enough to push your offer over the edge. The best part? It goes toward your closing costs and down payment at the end, so you’re not really paying any more by upping your deposit.
7. Choose a good agent.
The right real estate agent can make all the difference when you’re buying a house in a seller’s market. They can help you stand out, negotiate better deals, or even find properties that haven’t hit the market or have flown under the radar.
8. Act fast when you find something you like.
In a seller’s market, there’s no room for delay. If you see a property you like, schedule a tour that day. If there’s not time for that, consider making a sight-unseen offer (with your agent’s guidance, of course).
Finally, if you tour a home and think you might be interested, put in an offer as soon as possible. You’d be surprised how quickly homes can sell when the timing is right.
9. Think about removing some contingencies.
Contingencies are a risk for sellers. They allow buyers to back out of the deal if there are inspection problems, issues with the appraisal, or troubles in the mortgage process. Removing some of these can put sellers at ease and make the deal more favorable for them. Just make sure you talk to your agent before removing a contingency because it definitely increases your risk as a buyer.
10. Offer some flexibility.
If you can be flexible in some of your terms, do so. Be flexible about the closing date and timeline, and consider offering a lease-back, which can allow the sellers to rent back the home while they find a new place. You never know what circumstances the seller is dealing with, so being flexible with these items could make all the difference.
The bottom line about buying a house in a seller’s market
It’s harder to find a home in a seller’s market, but it’s definitely not impossible. To give yourself the best shot, get pre-approved before starting your home search and enlist a good real estate agent to guide the way.
Ready to get started? Get in touch with an Embrace Home Loans office in your area today.