5 Vital Tips For Buying In A Seller's Market

A seller's market breaks down to a reduction in available inventory and an increase in demand for those available homes. This market results in homes Bing at the center of aggressive bidding wars that increase the home's purchase price above the listing price. The prices of homes have been growing consistently during the market's upward trend, and it does not appear that this feature will end anytime soon.

Mortgage loan interest rates continue hovering at an all-time low, allowing buyers to explore lenders for the best terms and products. Buying a home during this market is not impossible but more complex than when the market targets the buyers. Possessing the proper strategy and creating a plan will assist the buyer in boosting their productivity of achieving a home that fulfills their needs and wants. 

Make Your Best Offer And Don't Counter

There are no counteroffers in a seller's market because they will not take the time when they have other offers equivalent or better to accept. When your best offer is your first offer, this strategy will improve your chances of a successful acceptance, especially when you offer the list price. Many real estate agents do not want to put in the extra work when the property receives multiple offers. When this happens, the amount goes past the listing price and achieves the seller's additional compensation. When counter offers are not an option in a seller's market, strategic planning and making your first offer, the best one you have, will increase your chances of that offer being enough.  

Prepare To Bid

If the strategy of offering the list price is unsuccessful, continue with your best offer but allow it not to be your finishing offer. Increasing your best offer by 3% over the maximum bid relays a substantial eagerness for purchasing the property. Many times this technique will be prosperous, and other times it will be ineffective. Reducing your budget to allow for a competitive bidding war will create additional funding to achieve your dream property. Strategic planning is essential when buying in the seller's market, and the practice of searching for homes below your approval amount will increase your chances of a successful offer acceptance. When the buyer has used preparation to ensure the ability to raise in outbidding another buyer, their chances are more favorable of acquiring the property when they are not searching in a market too close to their budget. 

Reduce Contingencies

Many sellers will accept your offer when the buyer is willing to reduce contingencies for closing to happen quicker. Contingencies can delay the closing process. When the buyer offers an increase in earnest money deposit and reduces inspection time, maybe these seller's terms are attractive and inviting. Keep in mind that when the property goes past listing price and the appraisal is below the offer, the mortgage will not receive approval, so offering features that complement your request can be beneficial. When an offer includes more significant contingencies, it puts the seller at risk, and generally, the seller will turn down the offer, especially if it's a seller's market. Negotiations can occur when the contingencies do not align with the buyer and seller goals.  When the buyer requires that their home sells to purchase a new home, this can delay the closing. This contingency creates an uncertain closing process because the buyer will not know when they sell their previous home. It also limits the seller from continuing to market their home in case the contingency is unfulfilled. 

Have Money Available For A Low Appraisal

When the purchase price surpasses the listing price, the potential for the home's appraisal may not reflect the home's value, therefore, creating the mortgage loan not to receive approval. When this scenario happens, the buyer has a few options to continue completing the home purchase. When a home appraisal is below the offer price, the buyer can choose to make up the difference in cash. The Lender will focus only on the mortgage and how it affects the loan-to-value ratio. The Lender will sell the loan but only for what the percentage will allow. 

Reducing the price of the home is another viable solution when there has been overpricing, which will appease the buyer, and the Lender can complete the mortgage loan. When the seller's primary focus is on closing, all parties involved are the correct solution. Acquiring a second appraisal is equivalent to a second opinion from a doctor. The second appraisal will often reflect the offer price needed for the buyer to complete the home sale. 

 Make It Personal

Keep in mind that when you are making an offer, this is the home the seller has created substantial memories of, and they most likely still have a significant attachment to the house. Having a buyer they feel will care for this home may potentially allow the buyer an upper hand by including a personal note with the offer. Including the features that are drawing the buyer to this particular house, such as the living space and the care of the home, will allow the seller the Peace of Mind they may potentially be seeking. The sellers are all selling their homes for various reasons. When that has been a difficult decision, a buyer with whom they can identify and align to their goals can transition more effectively.

Conclusion

A seller's market can be complex, but following a set of standards and guidelines can create a positive experience with the right team of professionals surrounding you. Buying a home in this market is not impossible, but having everything in place beforehand, such as pre-approval, budget, and your perfect professional team, will allow this transition to progress resulting in the purchase of your dream home. A quality real estate agent will have the experience and knowledge to guide you through the entire process from start to finish. Choosing your agent that shows proven success will allow you the confidence to ensure the best practices are in place.