When you’re looking for a home in a seller’s market, you need a plan in place to avoid making mistakes.
The real estate market often fluctuates, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. Buyers in a seller’s market can get what they want, but they need to bring their “A” game and be decisive. Here are six common mistakes and how to avoid them.
Not making your best offer
The motivation to buy what we want for as little money as possible is deeply engrained in us. So when most people see the listing price of a home, they naturally wonder what they can really get the house for. Offering lower than asking price is a reasonable strategy, especially if the house is overpriced compared with other similar homes in the area, or if it’s a buyer’s market with lots of available inventory. But trying to get a deal when you’re in a seller’s market might not be the best tactic. “In a seller’s market, many buyers do not step up with a strong enough offer,” says David Dubin, a New York broker. “There is usually a shortage of inventory, and the competition is usually fierce. I always encourage a buyer to come in with a strong opening offer.”
Over-Analyzing the Purchase Price
Just as impulse-buying a home is risky, over-analyzing a home purchase in a seller’s market is ill-advised as well. When you wait too long, “You are at high risk of losing [the home] you have fallen in love with,” says Dubin. Once you’ve determined the type of home you want, the location you desire, and your price range, and finally find a home that meets your qualifications, don’t wait to make an offer. To give yourself more leverage, be prepared to move quickly by having your finances in order — get a preapproval. “Know how much you can truly afford, repair any credit issues, have your down payment in hand, and delay [other] major purchases,” says John Lazenby, president of the Orlando Regional Realtor Association in Florida.
Working with an inexperienced agent
In a seller’s market, it benefits buyers to get all the help they can. If you have a seasoned agent on your side, you’ll probably have a better chance of getting the home you want. Plus, in most cases, buyers don’t pay real estate agents; sellers do. “When you are competing against other buyers in a fast-paced market, it is vital to be ‘offer-ready,’” says Michael Holt, a New York agent. “Working with a real estate professional saves tons of time and stress, as they know the ins and outs of the process and can provide tremendous insight regarding upcoming inventory.”
Not being prequalified (or better yet, preapproved) for a loan
You might know that you’ll be approved for a mortgage loan based on your steady income, your low debt-to-income ratio, and your high credit score — but the seller probably doesn’t know that. The only way to prove to the seller that you’re a qualified buyer is to be prequalified from a lender. “Prequalification is absolutely paramount,” says Teka Klopfenstein, a New York agent. “A buyer has zero advantage if they do not have the cash to purchase without a mortgage and haven’t taken the time to speak with a lender.” Not getting prequalified, she says, “sends a message to the seller that the buyer will lag on getting their ducks in order and aren’t taking their house hunting seriously.”
Prequalification means that you simply told your lender your financial story.Preapprovalinvolves submitting a mortgage application, complete with providing verifying documents. “Preapproval from a reputable lender is key,” says New York agent Ryan Stenta. “Presenting this shows the seller that the buyer has already set the wheels in motion and is serious about making [the deal] a reality.”
Not being prepared for a bidding war
If there is ever a time when a bidding war could be imminent, it’s during a seller’s market. No buyer wants to be involved in such a battle for fear of possibly going over budget. But broker Michael Holt presents this solution for buyers: “Set your search below your max budget to leave room in case of an over-asking bidding war.”
Not learning from your mistakes
There’s no shame in learning that your offer has been declined, but it’s easy to get frustrated if your offers are declined repeatedly. Learn from your last transaction(s) so you can move in to your dream home. Stenta says that buying a house, particularly for first-time buyers, is a lot like dating. “You probably have to let a few keepers slip through your fingers, have a couple sleepless nights over it, and then come back with serious intent to lock up the next greatest opportunity in front of you.”
Did you find and purchase a home in a seller’s market? Share your experiences in the comments below!
If your looking for an experienced agent contact me directly
The LUXRE Group at Keller Williams Realty is comprised of some of the most productive Realtors in the entire valley. We treat every listing as a luxury listing giving you a true luxury, vip, no hassle buying or selling experience. There is no substitute for the absolute best customer service and we pride ourselves on our returning clients who continue to refer and use us for all of their ongoing real estate needs. Get the luxury experience, get LUXRE! Each Office Independently Owned & Operated
Dobson Ranch home for sale - 4 Bedroom house for Sale Dobson Ranc
I am writing to express my pleasure with real estate agent Colleen Kukulski, who represented me in a recent purchase of a single-family home.
Ms. Kukulski guided me through the entire process, from loan prequalification to searching for houses to making the offer and closing the deal. I must give credit to Ms. Kukulski with a smooth, stress-free home-buying experience.
This is my third purchase of a property, and I never had such a pleasurable experience. Ms. Kukulski is savvy, personable and knows the market inside and out. I never could have gotten my current home without her.
To reiterate, I am nothing but pleased with Ms. Kukulski's and her experience and her expertise and I would recommend her to everyone.