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How to Compete in a Seller's Market
A seller's market is great news if you're listing a home, but it can be significantly more frustrating when you're on the other side of the transaction. The good news is that while there are added challenges to shopping in a seller's market, you can absolutely still find a home you will love for a price that fits within your budget. No matter what type of market you're shopping in, your planning, preparation, and discipline are ultimately what will lead you to the right fit. To succeed when buying a house in a seller's market, it helps to add a healthy dose of adaptability to the equation.
Navigate a Seller's Market and Emerge Victorious
While there are many big-picture drivers of real estate trends, the conditions that lead to a seller's market are not too difficult to diagnose. When a market has significantly more potential buyers than it does homes available, then the sellers are in the driver's seat for negotiations. While you can't force supply to catch up with demand, there are absolutely steps you can take to make buying a home easier in a seller's market.
- Get Mortgage Pre-Approval – Getting pre-approved for a mortgage is important no matter what the market looks like, and it becomes an absolute necessity when shopping in a seller's market. Basically, you can bet that the people competing with your offer have already been pre-approved, so you will also need pre-approval if you want your offer to make it onto the seller's radar screen.
- Do Your Research – Your real estate agent can give you a strong idea of local market conditions, along with details on the market's interest in specific properties. This information will help you establish a game-plan, and give you an idea of what your bid will need to look like to get into the race.
- Appeal to Emotion – While the financial particulars are the biggest determining factor in which offer is selected, there are many ways to "break a tie" when two buyers commit to similar offers. Writing a letter or otherwise contacting the homeowner to let them know how much you love the home – and why you love it – can actually make a real difference when the bidding gets tight.
- Stay Nimble – When you're shopping in a buyer's market, it can feel like time slows to a crawl while you're waiting to find the right match. Then, all of a sudden, you find the right home for the right price and need to be ready to close at lightning speed.
- Prepare yourself for that moment ahead of time by getting your finances in order, so that you'll be ready to pounce when the time is right. It's also good to be flexible about your move-in date, because if the home sells quickly the seller may need a little time to get their own situation in order.
- Consider an Escalation Clause – While you don't want to race right out with your top bid, you can add an escalation clause to your initial bid that declares how much you're willing to spend if another bidder tops your initial offer. An escalation clause can be a very valuable tool in a seller's market, but it's important to make sure you're approved for the necessary loan amount before adding the clause to your bid.
Our REALTORS® are here to help you find the right home, no matter the market conditions. Contact us to buy, sell, and shop for homes in Northern Indiana and Southwestern Michigan.
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