North Texas, it is a definitely a seller’s market right now. But the inventory of homes for sale are low. Many home buyers are eagerly waiting and watching for the right home to hit the market. Multiple offers on one home can cause an offer frenzy that often leaves the buyer discouraged because of competitive bidding wars. They may come to think they will never find their dream home. This scenario need not be the case for the prepared home buyer. When the buyer is prepared with tools that navigate the seller’s market, they will be ready to tackle any home buying issue head on. If you want to ensure that you get the home, you want—be prepared. I have written eleven things to prepare you for buying in a seller’s market and to help you get your offer accepted. This information can be daunting. To make it a bit easier to understand, I have split useful information in a three-piece series. Let’s begin with defining a seller’s market.
What Is a “Seller’s Market”?
There are three types of markets in real estate. A buyer’s market, seller’s market, and a neutral market. For the purpose of this blog I will only address the seller’s market. A seller’s market in real estate is when there is a higher demand for homes than supply of homes for sale. When there are fewer homes for sale, you will find several buyers competing to buy the same homes, which drives prices up. In this type of market, buyers will have to spend more time and money to get what they want. But with the right realtor, successful home purchase is attainable.
- In Any Home Buying & Selling Situation–Work with A Smart Realtor®
Seek out a knowledgeable realtor. You need to know as much as possible about the market you are buying in. Often times, real estate agents and brokers have worked together their in past, each will know of good lenders. Your Broker will have contacts in the mortgage business that will facilitate the sale between you (the borrower), the homeowner, and the bank or mortgage lender. Usually the seller’s agent will call the buyer’s agent to inquire about what lender the buyer is working with. At this point, the buyer’s agent will know if the listing agent (the seller’s agent) has received multiple offers on a home. In order to offer an appealing bid there are things you should know before the offer is presented. Before you make an appointment to view the home, your real estate agent will know to ask the seller’s agent all these questions.
- What is the property value per square foot?
- What are other properties in the area selling for?
- What kind of bidding activity has there been on the home?
- Has there been multiple offers on the home?
If you are absolutely in love with the home and want to make an offer, your real estate agent should guide you through making the best decisions for your offer. An CBNC article, Are you in a buyer’s or seller’s market? Prompts the buyer “to make smart bids.” In a seller’s market, you do not want to make a low-ball offer on a hot home that is priced right.
- Do Your Research Ahead of Time
If you know the type of home you are looking for, or have specific neighborhoods you would like to move to, it’s a good idea to do your research ahead of time. You should know what homes are selling for in your selected areas. Also, drive through the neighborhood at different times of the day to make sure the area is what you want. A quiet street during the day may be a party place at night. The information you find will guide you in your offer.
- Get A Mortgage Pre-Approval, Pre-Qualification Is Not Enough
Before your home search, it is wise to get mortgage prequalification and pre-approval. Attaining both helps to shorten the lending process and also shows the seller you can make a firm offer to buy their home. According to Homeloanbasics.com, “Prequalification is an unofficial estimate of how much house you can afford…Pre-approval on the other hand really carries a lot of weight in the mortgage and real estate industry. In order to be pre-approved for a loan you must sit down with your preferred lender and provide them with documents such as tax returns, bank statements, and business licenses…” A pre-approval is a smarter choice because in a seller’s market, you want to make sure that you have a flexible lender. Here’s why.
If you decide to write-up an offer at 7:00 pm, you or your real estate agent will need to contact the mortgage or lender to get a pre-approval letter for the offering price. Submitting a pre-approval letter with your offer can really help. It lets the home seller know you have actively worked to obtain a home loan.
- Look For The Potential In Every Home
Although, you may not be able to change a home’s layout, you can change many other things about the home. In a seller’s market, homes that are priced right and are in excellent condition will go quickly. However, there are other homes that are sitting on the market waiting for the right home buyer to come along. As a home buyer, look for the potential and consider a “fixer upper”. You can paint walls, add new flooring, change fixtures, and upgrade landscaping. Many homeowners are even painting the old cabinets to get an updated new look.
As you go forward into your housing hunting, remember, with the right real estate agent and Broker, there is no reason to lack confidence in navigating a seller’s market. Make these two people your friend, they are valuable assets of real estate guidance.
Are you in a buyer’s or seller’s housing market? Diana Olick | @DianaOlick. Friday, 29 May 2015 | 11:37 AM
(Accessed, Thursday, June 30th 2016)
What is the Difference Between Pre-qualification and Pre-approval? 09/19/2006
(Accessed, Thursday, June 30, 2016)