Buying in a seller’s market? Here’s 5 tips.
Source: Open Listings Blog
Looking to get in on that perfect home in your dream neighborhood?
So is everyone else. Whether it’s the killer school district, walkability, or central location that makes your target neighborhood a top pick, odds are homes for sale in hot markets are hard to come by.
If you want to call your dream ‘hood home, you’re going to need to buy smart. Luckily, you’re not in this alone. We know what buying in a hot market (also called a seller’s market) takes and how to get there. When the time comes to make an offer, you’ll want the leg up.
1. Get started ASAP
No matter where you live, houses in popular neighborhoods don’t come up often, and when they do, they don’t hang around for long.
With that in mind, if you have your heart set on buying in one of these areas, starting your house hunt early and having patience means that time will be on your side. And when the moment comes, you’ll need to act quickly.
Set yourself up for success by putting your dream ‘hood(s) in your Open Listings feed. That way, you’ll know the minute a house that matches your needs hits the market.
Once that happens, it’s show time.
If you’re really interested in the house, get as much info as you can beforehand: ask for property reports & disclosures, and find out when offers are due. Open Listings’ Buyer Experience team can reach out to the seller’s agent on your behalf.
Be sure to pay close attention to when any open houses are, or if possible, schedule a private house tour. But keep your schedule open, because in hot markets, this is one situation where you may not have a second chance.
2. Have your proof of funds & pre-approval ready
This part is where lots of excited homebuying first-timers get their heart broken.
If you’ve decided you want to throw your hat in the ring and make an offer, it’s safe to assume that many others have as well and that there will be multiple offers on the home.
For truly hot markets, you’ll likely only have a day or two to get your offer in order.
Even after you’ve seen the home, speed is still the name of the game. Double check with the selling agent when he or she intends to present any offers on the home so that you can be sure to submit yours on time.
In this case, it’s crucial to have any supplemental paperwork, like your mortgage pre-approval and proof of funds for the down payment, ready to go ahead of time.
3. Keep your offer simple
Most offers include contingencies — things like completing inspections and receiving a mortgage commitment — that need to happen for the transaction to move forward.
When looking at offers, sellers tend to see contingencies as potential opportunities for the deal to fall apart. As a result, they’re more likely to choose an offer that’s relatively “clean” or reduces their risk of potential hang-ups.
In a competitive market, you’ll see people either removing or reducing their contingency periods to make their offer more competitive.
However, it’s also crucial that you feel comfortable moving forward. If you choose to waive your inspections, you’re agreeing to buy the home regardless of what problems may exist.
As you put your offer together, consider how far you’re willing to go.
Would you rather buy this house with all its problems or wait for another property that will allow you more peace of mind?
4. Include a strong sale price
Aside from keeping your contingencies in check, there is one other obvious component of the offer that will help set you apart from the crowd — the offer price.
Put simply, money talks.
Sellers are likely to be enticed by a big payout, or if possible, a cash offer.
When you’re vying for a home in a popular neighborhood, you need to put your best foot forward.
As for how much you should offer, consider the asking price first. You’ll want to meet it and potentially go above. Consider the amount listed on your pre-approval as your maximum, and work within those limits.
You can use a mortgage calculator to get an idea of what your monthly payment will look like at various sale prices.
5. Write an offer letter
At face value, all offers look the same.
In a situation where the seller is contending with multiple offers, all that paperwork can have a tendency to blend together.
An offer letter, or a personal note you write to the seller explaining why you’re the perfect buyer for the home, might just be the thing that sets your package apart from the crowd.
Though it sounds like blowing hot air, a little flattery goes a long way.
We’ve found that Open Listings buyers who submit offer letters are 2x as likely to get the house.
The ideal offer letter is short, sweet, and to the point.
In a few paragraphs, you’ll want to tell the seller why you fell in love with there home and how you picture your future there.
Here, sentimentality is key. Your goal is to connect with the seller emotionally so that they’ll be more compelled to choose you. This post has more tips and examples on how to write an offer letter that will get you the house.