A seller’s market is simply a matter of economics. Inventory is low and demand is high, leading to some properties being on the market for only hours with competitive bidding.
Buying a home on Maui is always a good idea. Playing in the island sun all day, catching some pau hana surf on your way home, and picking fresh fruit from the weekend farmer’s market sounds like a dream. And we want to do everything we can to make this become your reality.
Buying a home in a seller’s market means the market is in the seller’s favor, inventory is low and demand is high. With this comes competitive bidding, quick listings, and the need for attention to detail more than ever. This doesn’t mean that you can’t buy a home in a seller’s market. It just means you’ll need to do your research, be a little creative, and have an awesome realtor on your side. If you’re ready to dive in, we have put together 6 tips for buying real estate in a seller’s market.
1. Low mortgage rates are your new best friend.
When you’re seeing higher prices for property, low mortgage rates tend to become your new best friend. To secure low rates, you’ll need to make sure you are financially prepared for the home-buying journey. This means settling debts, managing any overdue accounts, polishing your credit reports, not making any large purchases, and saving up. This preparation process should be started months in advance, long before you are ready to purchase.
Giving yourself time to get your credit score in check and covering all your bases will secure you a solid spot in the market. Having the funds to make a large down payment can also put you in a better situation at the beginning of your homeowner journey.
2. Get pre-approved. Period.
Preparation is key in a seller’s market. You need to move fast and efficiently to impress the sellers and qualify for the home you want. Getting pre-approved is the key to standing out from the crowd that is other buyers.
A pre-approval is the pre-qualification given from a lending company for a loan or mortgage. It means that you have already spoken to the lending institution, they’ve seen that you have a flowing income, your debts are being handled or settled, and your credit score is approved. This is the only way for the sellers to know you are a qualified buyer.
Even outside of a seller’s market, quality listings can go fast. If you find a home you want, chances are other people are also looking to make aggressive offers. Putting yourself in the lead is the only way to ensure you have a chance in a competitive market. Getting pre-approved not only makes your offer stand, it tells the sellers that you are a safe and reliable option. You have your paperwork ready, your financial situation handled, and all your ducks are in a row.
3. Time is of the essence. Always make your best offer first.
Typically when we’re looking to buy a house, negotiating for the lowest deal is the goal. If the sellers don’t accept your offer, you can always go look for something else closer to your budget. When there’s a chance to save money, who wouldn’t want to? This is not the case in a seller’s market. In this type of situation, you are at the seller’s mercy.
Deciding on an offer price can be the most important step you take. Beating out the competition right off the bat will be your best way of securing your dream home. If you’re not sure where to start you can always begin with the maximum amount listed on your pre-approval letter. After that, make sure you are at least offering the listed list price. Any amount you can spare after that puts you more at an advantage among the competition. In a seller’s market, the inventory is low so if you find a home you fall in love with, you can’t afford to be gentle in your bidding. Go big or go home.
4. Keep your eyes and ears open.
Amid all the craziness that comes with buying a home in a seller's market, it’s good to remember to keep your eyes and ears open. In a normal market, buyers can generally take a more leisure approach, taking their time looking for homes that meet their criteria and list of non-negotiables. You might pass up a house because the pool isn’t the right shape, the bedrooms are a tad small, or the kitchen isn’t as upgraded as you like. In a seller's market, you have to be flexible, quick, and open-minded.
Jumping on a home you can see yourself and your family in is crucial. With low inventory, there is no time to wait for a better option that might come along. Setting alerts on popular real estate sites, having your realtor be on the lookout for you, and checking online every day are great ways to stay ahead of the game. The more aggressive your approach the better your chances of securing a home is.
5. Blow away the competition.
Submitting a great offer is more than just a numbers game. If you really want to stand out, include an offer letter, and make a personal appeal to the sellers (you can even include a photo). Waiving a contingency or two can also help, as can a larger earnest money deposit or being flexible with your closing date.
Not everything in a home sale is about money. A seller’s nostalgia for their home can be strong, and a short, personal letter from a buyer that shares how they’d enjoy living there might sway them.
Promising to maintain the architectural heritage of a historic home, for example, or showing how much you look forward to taking care of the rose garden on the property can show that you’ll also have a sentimental attachment to the home.
Appealing to the heart may not be your first strategy, but it could be a smart way to complete a deal before it has even started.
On the surface, all offers look the same. That is to say, they all generally include the same information about the buyer. In a situation where the seller is considering multiple offers, all that information can start 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 offer apart from the others. Bear in mind that the ideal offer letter is short, sweet, and to the point. Your goal is to connect with the seller emotionally so that they’ll be more inclined to choose your offer. In a few paragraphs, you’ll want to tell the seller why you fell in love with their home and why they should sell to you.
Remember, here’s a reason people say “a little flattery goes a long way.” So, don’t be afraid to compliment the owner on things like how well they’ve maintained the home.
6. Have a trusted realtor on your team.
Having a trusted realtor on your team is like having a star quarterback throw you the ball on a winning touchdown. They are the best people to give you the tools and resources you need to succeed in a seller's market. They have years of experience in real estate and various markets, they can alert you to listings that haven’t been made public yet, they can keep you on schedule with a specific property, and they can give you tips and strategies for unique situations you find yourselves in.
Realtors know what sellers want to hear in any market and they can suggest the cherry on top when submitting an offer on your dream home.