How to Buy in a HOT Seller's Market
** Please note I am not a real estate attorney and I don’t practice real-estate law. This advice is not meant to be a one-size fits all approach. Please consult your real estate attorney if you have questions**
Home Buying Guide
Here in Dallas, spring came early this year. The real-estate market didn’t really slow down this fall. Instead, I found myself ramping up showings and offers as I had buyers entering the home buying process in November and December in an effort to avoid the HOT buyer competition of the spring and summer months. It seems that everyone else in the city had the same idea, so instead of the slight slow down I normally enjoy around the holidays, I was busier than ever!
As I was gathering my thoughts this afternoon after sending off contracts and talking to buyers and sellers, I thought it would be beneficial to put together a survival guide, so to speak, for buying in this market.
Buying a house can be stressful in the most favorable of markets. But when you’re faced with buying a home during a seller’s market, it can be down-right daunting. How can you stand out from the crowd? How long will it take to buy? What can you do to finally find a home? These are all questions that I answer everyday as an agent. Being prepared can eliminate a lot of the stress from the home-buying process. So what can you do to get ready? If you’re thinking of buying, start here:
Buying Tips to Make the Process Easier:
Talk to a Lender. Get Pre-Approved First.
There is a difference between a pre-qualification and a pre-approval. Finding a lender that you trust and who can get you pre-approved is a crucial first step in the buying process. Pre-qualification means that you have spoken to a lender and they think they can get you approved. Pre-approved means that you have given them documentation to back up your conversation and that based on those documents they can approve you. A pre-approval is stronger and tells a seller that you are serious about buying. Make sure you take the time to complete this step first.
Find a Real-Estate Agent You Can Count On.
In a faced paced market, a good real-estate agent can make or break a deal. If a house pops up on MLS in the morning, and you can’t get ahold of your agent until noon – you may have potentially just lost out on the house. Make sure that you and your agent have a conversation about how quickly you plan on buying, exactly what you’re looking for in a property and what price you’re willing to go up to. You need an agent that is responsive and that you can get in touch with easily.
Make Your Offer Early
The old adage is sometimes true: The early bird gets the worm. Sometimes, being the first through the door with an offer will get you the house. Don’t wait to make your offer if you want the house. Time is a luxury we don’t have in a competitive market.
Make Your Best Offer
Don’t expect the seller’s to counter your offer. If there are 10 offers on the first day (which is happening constantly in this market), you will not get another shot to make an offer. Go in with your highest and best offer initially. At the top of your budget? There are additional ways to sweeten the deal and make your offer more attractive to the seller. Consider these:
- Shorten your option period. If you have an inspector lined up who can get the inspection done in 3 days, consider asking for a 5 or 7 day option.
- Increase the option money – offering more than $100 or so can make your offer more attractive.
- Increase your earnest money – instead of the standard 1% offer 2% or more if you’re comfortable.
- Drop the contingencies – don’t ask for cash back towards closing costs, seller repairs or other contingencies unless you have to.
Be Prepared to Lose the House
If you’ve done everything you can to make your offer attractive, you still need to be prepared to lose out. When it comes to bidding wars, there are no guarantees. You can make an offer $20000 above asking price and still not be the highest offer.
The right house for you will come along. Sometimes buying can take months, and sometimes you get lucky on your first offer. It all comes down to timing. Be patient and it will all work out!