Part one of 11 Things A Buyer Should Know In A Seller’s Market, the definition of what a seller’s market is, and these helpful suggestions:
- In Any Home Buying & Selling Situation–Work with A Smart Realtor®
- Do Your Research Ahead Of Time
- Get A Mortgage Pre-Approval, Pre-Qualification Is Not Enough
- Look For The Potential In Every Home
Part two of this blog series are five, six, seven and eight. This focus is on budgeting, timing and communication in a seller’s market.
- Stay Within Your Budget
In a seller’s market, don’t assume that the seller will drop their price to suit your price point. When homes are selling fast, expect to offer full-price and know what your maximum offer is. When there are multiple offers, you may need to go above asking price. Also, it is helpful to have a second or even a third choice of homes. You will save yourself disappointment if the seller rejects your maximum offer. Make sure to include in your budget for certain financial concerns, such as how much earnest money to offer up front.
- Offer More Cash Upfront
When making an offer, earnest money typically comes into play. Earnest money is money the buyer offers the seller, as a serious intention toward home purchase. In a seller’s market offering more earnest money can show the seller the height of your interest. There are instances where “… a seller could instruct an agent to only present offers that include an earnest-money check…” (Texas Association of Realtors n.d.) If your earnest money is more than your competition, you have a higher chance of an acceptable offer. Also, when placing a large down payment, make sure that the seller knows that. The more available cash you have to work with the stronger you appear to the buyer. Same goes for the Option Fee/Option Period. The Option Fee covers cost such as home inspections, check utility costs and many other things. The Option Period is typically about 10 days starting from when you write the offer. If you find there is something that you are concerned about, you can terminate the contract during the Option Period. You must terminate the contract before the Option Period expires so that you will get your earnest money back. If you want the home and the seller needs to sell quickly, you may offer to increase the Option Fee and or shorten the Option Period.
- Be Flexible On Timing
Timing is everything. Try to find out when and why the seller has listed their home. This information will help determine what kind of closing date to offer. The sooner you can close; the sooner the seller can move on. Consider delays, there could be problems on the seller side. Perhaps there are new home construction problems, or purchase agreement disputes. Perhaps the sellers are unable to move into their new home. In which case, after closing, you may offer to lease the home to the seller for a few weeks or a month. Any of these situations can cause closing date delays. So, if other buyers are submitting offers, being flexible will give you bonus points.
- Get Personal With The Home Seller
If you want to win the home seller over; include some emotion. Write a personal letter to the seller and include it with your offer. Flatter the seller by complimenting them on how well they have maintained their yard. Tell them about your family, or that they have an eye for color choice and decorating. Let the sellers know how much you love the home and why you can see yourself living there. Be sure to be nice but don’t whine. Complaints are a sure killer for gaining emotional connections with the seller.