You keep hearing the phrase “it’s a seller’s market,” but what does that mean? What impact does that have on you as a buyer?
To best understand what a seller’s market is, it is best to first understand that it is simply a matter of basic economics—a rule of supply and demand. In a seller’s market, home inventory is low and the demand to purchase homes is high. The low supply and high demand lead to competitive bidding and higher home prices.
The National Association of Realtors reports that home prices have consistently risen for over 50 consecutive months. In just 6 years the median existing-home price is up 6.3%, and in the last year, home inventory is 3.6% lower. These numbers may be music to your ears if you are looking to sell your home, but how does this affect you if you are looking to buy?
Five Tips For Buying In A Seller’s Market
As a potential home buyer, it is crucial to understand how the seller’s market works. Our experts at True Concept Title have put together some tips to help you understand how to navigate the home buying process.
1. Make Your Best Offer First
In a seller’s market, it is recommended to offer the asking list price quickly to prevent competitive bids. If this truly is the home you want, do not try to come in with a low offer to potentially lose the home to another offer that offered what was being asked by the seller.
Additionally, a seller does not want to write a counteroffer, especially if they have multiple offers all at once. A seller will pick and choose the best offer—so make sure you put your best offer on the table first!
2. Be Ready To Offer More
In a true seller’s market, there may be multiple offers on a home. When going into the home buying process, you need to mentally (and financially) prepare to offer more than asking. Be prepared for your initial offer to not be your final offer.
To make sure you can afford to offer more than asking you should only look at homes in your price range that are up to 89% of your maximum budget. This technique allows you to have extra funds—in your price range—in case there is a bidding war.
3. Offer Cash
If you can offer cash, you will catch the seller’s attention and show how serious you are about purchasing the home.
You can offer cash in two ways:
- Offer more cash than normal in earnest money. Earnest money is a deposit by the potential buyer to the seller to show the buyer’s good faith in the transaction. If a buyer can offer more cash towards the earnest money, it will show the seller how serious they are.
- If you can, offer and make a complete cash offer. The process of not using a mortgage lender can simplify the home selling/buying process. In a hot market, it is very appealing to a seller to receive cash offers.
We understand this is one of the largest purchases of your life. We’ll protect your purchase with top-notch title insurance and escrow service. When you’re ready to close, we’ll come to you for convenient mobile closing. You have a choice; call True Concept Title today.
4. Offer Non-Financial Incentives
When there are multiple offers, home sellers will look for potential buyers that can offer other non-financial incentives. These incentives can ultimately distinguish you from another offer.
Some examples of non-financial incentives include:
- Waiving the home inspection contingency
- Purchasing the house “as-is” even after a home inspection brings up issues
- Offering flexible dates and deadlines that work for the seller
5. Appeal to the Seller’s Emotions
Oftentimes there is more to a home sale than money. You may be able to use the seller’s nostalgia for their home as an advantage. While this should not be the first strategy you use to secure a home, it is a smart way to complete the deal.
Adding in a personal letter or video to your offer has the chance to appeal to the emotions of the seller. Before you write your letter or send your video make sure you understand the seller and what will pull at their heartstrings. Did they raise their entire family in that home, just as you want to do? Will you upkeep the architectural heritage of the home, as they did?
Think about what made the home so special to the seller and what you as a buyer can offer the home once they leave that will make them feel you are the best and only fit for their beloved home.
Buy Confidently in a Seller’s Market
Do not let the idea of a seller’s market dissuade you from purchasing a home. Mortgage rates are at an all-time low so if you go into the home buying process with an open mind and some knowledgeable tips, you will find the perfect home for you and your family.
True Concept Title is ready to take you through that process starting with finding the lowest interest rates and the best loan options. Call 813-263-7168 today to get the home buying purchase process started.