The phrase, “Seller’s Market” is everywhere at the moment. Current housing inventory is low, creating high demand and raising prices substantially. What if you are looking to buy? Buying a home is a complex process and current market conditions can make the process even more daunting. Reduce the stress in buying a home with these tips suggested by the National Association of REALTORS® (NAR):
Determine your budget and stick to it.
Before you begin searching for a home, you’ll need to determine your budget. With high demand and low inventory conditions, bidding wars can increase prices. In order to make a sound decision, you’ll want to know what you can afford up front. First, determine the amount of money you are qualified to borrow by working with one or more lenders for preapproval. Second, be sure to calculate in any additional costs of ownership such as utilities, insurance, and taxes. Once you have total costs considered, determine your budget and be prepared to walk away if prices increase beyond what you can afford.
Identify your wants verses needs.
Low inventory makes it easy to compromise on what you really want in a home. Place a strong consideration on the specific neighborhoods you are interested in. In selecting neighborhoods, be sure to look at factors like school districts and backyard. Identify then what you consider to be a want verses a need. Remember that certain aesthetic aspects of a home like hardwood floors or countertop finishes can be remodeled later – While lot size cannot.
Be prepared to make a quick decision.
Part of why understanding your needs verses wants up front is important is because you’ll probably need to act quickly. It’s no surprise that low inventory means homes don’t stay on the market for long, so if a house meets all of your requirements including budget, location, and features, be prepared to submit an offer right away, or risk missing out on the home completely.
Be flexible but competitive.
It is typical for buyers to submit an offer with a low starting bid and work their way up. In a seller’s market however, you are likely to lose out on the home if your bid is not competitive enough. It is recommended you submit your highest offer initially in order to remain a contender. However it is also important to remember not all offers are assessed entirely monetarily. The highest bid won’t always appeal to the seller as much as perhaps a lower bid with less contingencies. Create a list of things you can and cannot be flexible with such as your move in date. Removing such restrictions can create more appeal to the seller.
Work with a local REALTOR®.
Real estate is local, so it is important to work with an agent you can trust who is familiar with the areas and neighborhoods you are considering. With both knowledge of their communities and experience in negotiation and the transaction process, they can give a buyer the competitive advantage needed in a tight market.