Real estate continues to be a “seller’s market” this year. What does that mean? Inventory is low, home prices are trending upward, and houses don’t stay on the market long. It means that times are good for home sellers. It doesn’t mean that times are bad for buyers, though. Now is still a great time to buy a house. Home values continue to trend upward but within a reasonable range and interest rates are still low. However, buyers should prepare for some competition.
There are many of you out there vying for limited inventory! But don’t fret – There are things you can do now to separate yourself from the rest of the pack.
Follow these guidelines to put yourself in a better position as you begin your home search:
Pre-approval means you’ve applied for a home loan and you’re prepared to make an offer. The benefit to you as the buyer is that you’ll know how much house you can afford and when you’ll be ready to close. The benefit to a potential seller is that they know that if they accept your offer it’s likely to close as expected.
Imagine the alternative: A buyer who hasn’t been approved for a home loan. Sellers are generally hesitant to work with buyers who don’t present proof of financing (i.e. a pre-approval letter). In a seller’s market, they’re even more hesitant to work with unapproved buyers and may not even entertain your offer. So get pre-approved before you start shopping.
Inventory is low in a seller’s market. Desirable homes don’t stay on the market long and it’s not uncommon for more than one buyer to show interest in a property. Pre-approval is important here as it may help to keep your offer at the top of the pile. Also important is working with an established Realtor.
Also known as a “buyer’s agent,” your Realtor is your #1 advocate in a homebuying situation. Don’t work directly with the seller’s agent in a transaction unless you know him or her and would have already chosen them as your representation. Having your own representation during the negotiation and at the closing table is essential to your best interests. See my previous blog on Why You Should Hire a Buyer’s Agent for more on this topic.
And by the way, the seller pays the commission to both Realtors regardless of whether you bring your own agent to the table – so enlist the help of your own Realtor before you start shopping.
An experienced Realtor has weathered a seller’s market before. He or she is respected in the marketplace. A seasoned Realtor has a productive history of working with other real estate agents and industry professionals like home inspectors and title rep’s. The right agent for you will also know your market well and will prepare in advance for showings and purchase offers. Time is of the essence in a seller’s market and you need a Realtor who shows up prepared, informed, and ready to negotiate.
Homes don’t stay on the market long when inventory is low. Be willing to drop everything to go out and see a house the day it comes on the market. Waiting even a few days could mean you’ve missed your chance. Also, be ready to make an offer within 24 hours of viewing a property and prepare yourself for a multiple-offer situation. Have your pre-approval letter ready and work with a Realtor who knows the market.
Even if you’re financing 100% of the purchase price, sellers in today’s market are less willing to help with closing costs. Put simply, they don’t necessarily have to sweeten the deal by offering to help with points, title fees, taxes, etc. (This is different from years past when real estate was considered a “buyer’s market.”) Plan to have some money available in your checking account in case you need to write a check at closing.
Following these six pieces of industry advice will put you in an enhanced position for homebuying. Working together with a mortgage company and Realtor, even a first-time homebuyer can navigate today’s seller’s market and find the perfect home at the right price!
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