In a seller’s market, it’s not uncommon for new listings to have multiple offers in the space of twenty-four hours. That’s great news for sellers, but what does it mean for buyers?
Generally, it means that if you want a chance at that dream home you just fell in love with, you’ll need to act decisively and above all, quickly. True, it may be a different experience from buying in a more balanced market. But if you aren’t able or willing to wait for the scales to tip back the other way, buying can still be completely doable! With some preparation on the front end, you’ll be able to make these big decisions with confidence and get the seller’s attention…even if you find yourself in a bidding war. Here’s how.
Be ready to move fast!
Properties can move quickly in a seller’s market. Very quickly. If you jump in feet first, you’ll find yourself stressed out and struggling to keep up! That’s why it’s important to do some prep work before you start looking in earnest.
Start by getting your lending paperwork in order. That means tax documents, proof of income, and proof of identity (potential lenders can tell you what else, if anything, you’ll need). You’ll want to have an idea of your credit score as well. It’s also not a bad idea to confirm that you have the funds for an earnest money deposit ready and waiting.
Before you start looking at properties, know what you are looking for.
When you’re sure of what you want, it’s a lot easier to jump on the right properties as they come on the market! You may wish to set your search at the lower end or middle of your budget, so that you can offer full price (or higher, if it makes sense) without hesitation if you find “the one.”
Get preapproved before you fall in love.
Once you have your ducks in a row, you’ll need official proof that you’re a serious buyer. Preapproval from a lender will set you apart from the buyers who have no way to show they can back up their offer. (And be sure you are getting preAPPROVAL, as it will carry more weight than a prequalification). For first-time buyers, it may feel backwards to shop for a lender before you shop for a house. But sellers with multiple offers will be looking for the most stable option. If you can’t back up your offer with a preapproval, they may see you as a risk, no matter how appealing your terms are.
Work with an experienced REALTOR®.
High-pressure markets are where a good REALTOR® really shines. They’ll be able to update you on new properties that fit your criteria and possibly even work closely with the listing agent to get the deal done. REALTORS® are especially helpful if you find a fast-paced seller’s market intimidating. If you’re concerned about negotiating while the seller is at an advantage, look for a REALTOR® with a negotiation-related designation after their name. This means they’ve done coursework and professional development to become a better negotiator—something you really want in your corner right now!
Make your offer count.
When it comes down to a bidding war (which you may see a lot of in a seller’s market) a competitive offer is key. A multiple offer situation is not the time to offer low and hope to meet in the middle! There are a few things you can consider to make your offer as appealing as possible:
- Make a large down payment if you can. This can help with the lending process, but it also looks good to the seller that you’re serious enough to have money saved and ready.
- Be flexible about closing. Is the seller in a hurry to move? Or will they need a little time? Your REALTOR® may be able to feel out this information for you and help you structure an attractive offer around it.
- Take a long look at your contingencies. While it’s always a good idea to get an inspection if possible, in some circumstances there may be contingencies you can do without in order to build a stronger offer.
And of course, cash is king. If you can pay for the property without going through a lender, your offer will definitely stand out.
Know your deal breakers.
You may find yourself in a situation where you need to decide whether to put in an offer immediately after seeing a home. That can be a high-pressure situation, but it will be easier if you know for sure what you are not willing to compromise on.
If you’re simply not a fan of the aesthetic of a house, for example, you may be able to settle for some cosmetic changes. But if you know for sure that you aren’t willing to increase your commute or that you won’t budge on having a home office space, then homes that don’t meet that criteria aren’t worth agonizing over.
Make it personal—in a good way.
In some cases, your REALTOR® may recommend that you write a letter to the seller. Houses can be very personal, and a long-time owner may be reassured to know that their old home will be in good hands. A letter also allows you to make your case in an easily digestible format, which could be a nice break for a seller who is sifting through a pile of different offers. While a personal letter may not be appropriate for every offer, it’s a good tool to have in your kit.
Keep an eye out for a change in the wind.
Any market has the ability to change quickly. Stay tuned into real estate trends in your desired area…you may find that by the time you’re ready to dive into an offer, the power dynamic between buyers and sellers has shifted. As always, your REALTOR® will be a great resource as you navigate changes in the local market.