First Time Homebuyers And How To Win In A Seller’s Market
Win in Seller’s Market
As a first time home buyer, buying a home in a seller’s market can be difficult, but it doesn’t have to be impossible.
A seller’s market occurs when there is a low inventory of homes for sale and a large number of buyers creating high demand. It can lead to competitive bidding and high prices.
A real estate agent can help you determine if you’re in a seller’s market so you can adapt your home buying strategy. A market absorption rate calculator can help by calculating how many months it would take to sell all the remaining homes, or inventory, for sale in a given area. A low number under 6 months, means you’re in a seller’s market.
Here are four ways to be successful home buyers in a seller’s market:
Be ready to bid high
Whatever your budget is, be prepared to go in with an offer for the listing price whenever you are trying to compete in a seller’s market and inventory is low. It can prevent other bidders from coming in and can help you avoid competing with multiple buyers.
If that tactic doesn’t work, be prepared to increase your offer to your best offer, but not your final offer. Add an escalation clause of $1,000-$2,000 more than the highest offer, but only if you’re able to pay the most for the property.
Another tactic is to work a bidding war into your budget by only looking at houses listed for up to 90 percent of your home loan/price range. This will give you extra money if a bidding war starts.
You may not get a counter offer in a seller’s market.
Put your best offer on the table early. Sellers could see a dozen offers at once, and they’re unlikely to counter with buyers if they have a lot of high offers to choose from.
Show them the money
Show a seller how serious you are by offering more cash than normal in earnest money — a deposit made to the seller to show a buyer’s good faith in a transaction. If a high earnest money deposit in your area is 2%, then increase it to 3%.
Offer non-price factors
Some sellers will accept your price if you provide some non-price considerations that can speed up the transaction, also called contingencies.
These include waiving the financing contingency, limiting the home inspection to five to seven days or eliminating the home inspection completely (not usually recommended), giving sellers extra time to move out at no charge to the seller, have your inspection scheduled and submit the date of inspection with your offer.
If you need help with a mortgage loan or are interested in the loan programs available to you as a first time home buyer please feel free to reach out to me!