When there is low inventory and competition from other buyers, you have to change your approach to the home search.
A seller’s market, like the one we are currently experiencing, doesn’t mean it’s a bad time to buy (especially with today’s low mortgage rates). It just means you need to be prepared.
Learn the biggest mistakes buyers make in seller’s market, so you can avoid them.
Failing to Get Pre-approved for a Loan
Sellers will not entertain offers without secure financing. In fact, your buyer’s agent won’t even be able to write up an offer without it. Meet with a mortgage lender before you start your home search to learn how much house you can afford and what type of loan you qualify for.
Getting Emotionally Attached
Some buyers fall in love with a home before they even step foot in the door. This type of emotional attachment is bound to leave you disappointed if you are outbid by another buyer. In some cases, it could also lead to you overpaying for a home.
Even with today’s low inventory, there are properties being listed for sale every week. Know that if you don’t get the house you have your heart set on, there will be more options available.
Homes are moving fast. Many properties under $400,000 are receiving offers within a day or two of being listed for sale. If you see a property online that you are interested in, ask your agent to see it as soon as possible.
Before you get in the door, do as much research on the home as you can – go through the photos, listing description, and specs. Drive-by the property to determine if you like the location. If that is not an option, use satellite or street view maps to get a ‘feel’ of the neighborhood. If you still like the home after your showing, be prepared to make an offer.
Acting Out of Desperation
While you don’t want to hesitate, it’s also a big mistake to act out of desperation. Some buyers start to fear that they will never find a property suitable for them, so they make an impulsive offer on something that doesn’t fit their needs. If a house isn’t for you, there’s no need to make an offer.
Not Making Your Best Offer
When you find a home that fits your needs, don’t make the mistake of making a low-ball offer and expecting to negotiate. In a seller’s market, the seller won’t bother coming back with a different price, they’ll simply wait for a more reasonable offer from another buyer.
Stretching Your Budget Too Far
Bidding wars can lead to you going above your set budget, leaving you with fewer funds for moving costs, upgrades you want to make, and routine home maintenance. Set a hard top budget – one you are not willing to go above – and be willing to walk away if needed.
Working with an Unproductive Agent
In most scenarios, sellers have a dedicated real estate agent working on their behalf. As a buyer, you should too. Working with a knowledgeable buyer’s agent will help you find new listings within your budget, make a competitive offer, and relieve stress, as you know someone is looking out for your best interests. Find a full-time agent you trust, and stay in communication throughout the process.
Are you ready to begin your home search?