The real estate market can be difficult to navigate for both buyers and sellers. First-time buyers can easily become overwhelmed as they search for homes, while sellers hoping to get the best price for their homes might be frustrated if offers are slow to come in or fall short of their asking prices.
Buying in a seller’s market can be competitive and frustrating, but buyers can employ various strategies to survive such markets and land the homes of their dreams.
• Get mortgage pre-approval. Seller’s markets typically feature low inventory, which can make the buying process very competitive. Prospective buyers who do not have a mortgage pre-approval letter in hand when making offers may find themselves losing out on their dream homes to fellow buyers who have gotten pre-approval from a lending institution. Sellers may be impatient with buyers who have not yet been pre-approved for a mortgage, even accepting a lesser offer from buyers who are ready to begin transactions immediately. The pre-approval process is relatively quick and simple, so buyers should not hesitate to apply.
• Stick to a budget. Lenders will indicate to prospective buyers how much they’re willing to lend them, and that figure is typically considerably more than buyers are willing to borrow. In a seller’s market, bidding wars can quickly drive up prices, but buyers should stick to their budgets so they are not house poor after buying. Sticking to a budget can be difficult in a seller’s market, but such patience will likely pay off in the long run.
• Be ready to compromise. Unless they have unlimited budgets, buyers often must compromise when purchasing a home. That’s especially true in a seller’s market with limited inventory. Buyers who need to buy a home must identify their needs versus their wants and recognize the likelihood that they will have to compromise.
• Work with real estate agents. Some buyers may be tempted to go it alone, searching for and ultimately buying homes without the help of real estate agents. That can be a foolish move in a seller’s market where competition is high and inventory quickly disappears from the market. Veteran real estate agents have worked in buyer’s and seller’s markets, and buyers can use that experience to their advantage. In addition, real estate agents likely have access to inventory before homes appear on popular real estate websites, giving buyers working with them a leg up in competitive markets.
Buying a home in a seller’s market can be fast-moving and very competitive. But various strategies can ensure buyers still find great homes at great prices in such markets.