The current real estate market is nothing short of a wild roller coaster ride if you’re looking to buy. Inventory continues to be low and sellers are getting multiple bids — some well over the asking price. So how can you compete? Read on for some tips.
How to Be a Competitive Buyer in a Hot Market
Gather your paperwork – It’s a good idea to start gathering all the records and information you will need before you start house hunting, so if you need to order replacements for any missing documents, you’ll have time. Waiting could lead to delays in financing.- Get pre-approved – A pre-approval (unlike being pre-qualified) requires a lender to verify your income and credit to determine what you can pay for a home. If you already have the underwriting from a lender in place, then you are in a much stronger position than other buyers when there are several offers on the table.
- Pick the right real estate agent – Having a real estate agent who’s experienced in the area you want to buy in and understands your family’s needs is a must in a hot market. An agent is also important because they know what’s available and what will sell fast. Ask for recommendations from past clients, preferably within the last six months, before you decide on an agent.
- Know what you’re looking for – It’s important to know exactly what you’re looking for before you start house hunting. Find out what kinds of homes are available in the area you will be searching and what the market is like there. Once you are ready to buy and start looking at homes, view the home carefully to make sure it suits your needs. You won’t have time to come back and measure to make sure your furniture fits or do another visit for an extended family member who may be planning to live with you.
- Assess your wants vs. needs – Make a list of your wants vs. your needs when it comes to a home. Some things like good schools and a low crime rate may be extra important. Determine which things are deal breakers for you and which things you can compromise on.
- Move quickly – If you’ve done all of the above, this step will be easy. Once you’ve found what you’re looking for, put in an offer right away. Be ready with negotiating strategies and know how high you are willing to go if you end up competing with multiple offers.
Be nice – Buying a home is stressful. It’s important to show the seller that you are willing to make life easier for them by scheduling the home inspection right away and offering to rent the home back to the seller if needed. Consider writing the seller a letter and letting them know how much you love their home. Keep it short, sweet, personal and to-the-point.- Consider forgoing contingencies – Contingencies such as being able to secure financing and a problem-free home inspection could be a hindrance in a competitive market, but before removing them, talk with your real estate agents about the risks. Being willing to remove contingencies lets the seller know that you’re ready to move on the sale.
- Choose a local lender – A lender with local relationships can help you in a bidding war because the seller’s agent may already be familiar with them. Additionally, a national lender may not prioritize your application or understand the market you are buying in. Find out if potential lenders have a good record of closing in your market.
- Put down a competitive Earnest Money Deposit (EMD) – An EMD shows the seller that you’re a good faith buyer who is ready to close on the home. This is usually 1-3% of the sale price, but can be as high as 10%.
- Make a large down payment – A sizable down payment is important in a competitive market as it will make your offer stronger and send a message to the seller that you can afford the home.
- Offer above the asking price – It’s hard to compete with cash offers. One way to do that is to offer above the asking price as the cash offers tend to be at or below the asking price.
Do you still have questions about buying in the current market? We’d love to help! Reach out to us at 571-234-5589 or email us at [email protected]. For videos on lead generation, Facebook tips, handy realtor tools and more, be sure to check out our YouTube channel.