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Home Buyers – How to WIN THE DEAL in a Seller’s Market
Buyers need to be prepared to move quickly in a Seller’s Market!
Most of the real estate markets across the country are experiencing a seller’s market. A Seller’s Market occurs when sellers have an advantage over buyers looking for a home due to several factors. Supply and Demand are the strongest factors favoring sellers in a Seller’s Market.
The number of available homes for sale is low relative to the number of active buyers. As we are all aware, lower supply drives prices up. Many sellers – especially the ones who are not strongly motivated to sell – are increasingly firm on their list prices. Many do not sell, but there are those that do. Sellers who are price correctly are getting multiple offers. Bidding wars ensue, and their homes sell quickly and often above the appraised value. These supply factors are causing home prices to increase. Many sellers are learning a low appraisal from their buyer’s lender will not kill their deals, and more and more buyers are paying over appraised value. Sellers are finding cash buyers who are willing to pay their price. Many of these cash buyers are foreign investors and downsizing Baby-Boomer, empty nesters.
We are seeing more buyers than home inventory. When mortgage interest rates are low then historically buyer demand strengthens. Relaxing lending standards from both Fannie Mae and FHA make buying more attractive. Renters are facing higher rents, and the math shows the low-interest rates have made ownership more affordable than renting.
This Seller’s Market creates quite a quandary for homebuyers. Buyers can overcome these obstacles if they are prepared and knowledgeable about what they are facing.
It is in the Buyer’s best interest to work with a highly skilled real estate professional. Follow their advice and guidance to achieve the most favorable outcome.
Keep in mind these essential key steps to winning the deal in a seller’s market.
First, get with a lender you trust and make sure you are fully pre-approved. The difference between being pre-qualified and pre-approved is critical, so make sure you understand what this means to you as a home buyer.
It is also important to know how much you can afford before you get started. Looking at homes that are more expensive and then scaling down several thousand dollars often leads to disappointment.
In most markets, especially when it is a seller’s market the list price to sale price ratios is usually very low. Typically, they are as low as 3% to 5% of the sales price. It is not a good idea to go much higher and expect to get a deal in a seller’s market.
Be sure and know how much money you will need for down payment and closing costs. If you move up in sales price, then costs to close will also increase.
Know Your Needs vs. Wants
When inventory is low and, homebuyers have fewer homes to select from then, it would be reasonable to consider a compromise in certain amenities. Decide ahead of time what you are willing to compromise.
Understand homes that are in good condition and priced well are going to sell fast.
In a seller’s market those homes that are priced right, show well and have everything going for them are going to sell at a rapid-fire rate!
They may even have multiple offers, and the listing agents will probably be taking backup offers. Therefore, move quickly, do not linger thinking you can think about it for a week unless you are okay with the possibility of losing the home to someone else.
Keep in mind that sometimes it takes a while to get out of a seller’s market. Potential sellers are in the same situation, they need a place to move to, and unless they can find a replacement home, many are unwilling to put their homes on the market for sale.
Therefore, if you are serious don’t delay and make finding the right home for yourself and family a top priority! I hope you found this information helpful and please don’t hesitate to leave a comment.
Give us a call today we would love to talk to you about your options.