What makes a seller’s market in real estate? A seller’s market occurs when there are more buyers than there are available houses in a particular area. Low inventory on houses means more people are competing to buy each house. In some cases, this leads to frustrating bidding wars and escalated costs. You don’t have to lose out on your dream house in a seller’s market. Here are some things you can do to increase your chances of making an offer and closing on your dream home.
- Prepare your credit. Don’t wait until you find a house you love before thinking about what your credit score looks like. Many hearts have been broken and dreams shattered when would-be buyers want to make an offer on a house they love, but their credit score prevents them from getting a home mortgage loan. Your credit report should be in pristine condition before you even think about looking for houses. Get a copy of your credit report and make corrections where needed. If you have items in collections, pay them off. If there are errors on your report, get them removed. Without a solid credit score, you’ll likely lose out on the battle for a property in a seller’s market.
- Save money. Before you can think about buying a house, you’ll need an adequate amount of savings. You’ll be responsible for paying a good faith deposit, a down payment on the home of around 20 percent, closing costs, and may need an emergency fund for unforeseen expenses. Although there are some programs in place to aid first time buyers and lessen deposits and down payments, when you’re in a seller’s market, cash is king and could make the difference in your offer being accepted over that of a competing offer.
- Get pre-approval. With your credit score glistening and your cash savings in place, it’s time to talk to a lender and get pre-approved for your home mortgage loan. Being pre-approved informs you as to how much you can afford to spend, and informs the seller that you’re prepared to do serious business. Having a pre-approval letter automatically qualifies you as a qualified buyer, which could give you an edge over competing offers.
- Hire a professional real estate agent. Choose one who is an expert in the type of property you’d like to buy, and who also has extensive knowledge about the neighborhoods in which you’d like to look for properties. Your agent will not only help you find a house that ticks off all the boxes on your wish list, but will also help you create a solid offer and negotiate terms. Your real estate agent should be informed in advance about competing offers, so that your offer can be rock solid.
- Consider an escalation clause in your contract. An escalation clause presents in writing how much more you’re willing to pay than competing offers, up to a specific amount. This lets the seller know you’re serious and aggressive when it comes to placing an offer on a property.
- Timing is of the essence. When you can be flexible with your timing, you could edge out the competition. If a seller needs to move within thirty days and a potential buyer isn’t ready to move for sixty days, that time difference could be a deal breaker. If you can, allow yourself flexibility with closing dates. This timing flexibility could give you the advantage over your competition.
Searching for your dream house in a seller’s market could be unnerving. In a seller’s market, things move quickly. By preparing in advance, you’re giving yourself a time advantage over others who didn’t put forth the effort ahead of time. Make sure your credit is glistening. Save in advance for deposits and down payments. Seek pre-approval before your search begins. Work with an experienced and qualified real estate agent. Be prepared to be aggressive with your offer, including a potential escalation clause. Allow yourself flexibility with time constraints, ready to move in thirty days, or willing to wait longer if necessary. With a bit of forethought and earnest preparation, you could give yourself just the edge you need to close the deal on your dream house, even in a seller’s market.
Want to know more about how we can help you buy your dream house? Call us today at 402-880-9027.