2020 was a year of a lot of big and unpredictable changes. The same sentiment holds true when looking at the real estate market through all of last year. We experienced some extreme changes, from hitting unseen lows to forecasting at decade record highs, homes on the market experienced varying fluctuations. As with most of 2020, this year will continue on the trend of being a strong seller’s market. With home demand being a lot higher than home availability, sellers will continue to maintain vast control over the market, but that doesn’t mean it’s not a great time to buy the home of your dreams.
As a first-time homebuyer, or even a seasoned purchaser in the real estate market, knowing when the right time to buy is quite simple. But when you’re ready. Focus less on the changes in the market and more on when is a good time for you, your family, and your finances.
Navigating a seller’s market can feel overwhelming, but it’s possible to score the home you love, in your budget, when you want it. You have to be mindful of some top tips that can assist you in your home buying process. My advice for buyers in 2021 (or any seller’s market) falls within simple guidelines: prepare your wants and needs ahead of time, determine what you are okay to settle on, figure out your budget and work with a realtor who understands your ideal area.
Here are some other helpful tips to score big in a seller’s market.
Avoid tunnel vision and expand your location options
When homes are in high demand, it may be harder to find a home that checks off all your wants and needs in your desired location. Expand your search to towns and cities that lie just outside your preferred area. This will expand your overall options list when it comes to available homes. Home prices are soaring in highly desirable neighborhoods, so you may not find something within your budget if your ideal location is in a hot location. If you opt for locations that are a little less in demand you will get more square footage for your money. There are many great neighborhoods in lesser-known towns that boast amazing shops, schools, and amenities, so, think outside the box.
Focus on the bigger picture, don’t get caught up in the details
If your list of wants and needs is expansive, clean it up a bit. Avoid getting discouraged over a house that doesn’t check off every single box on your list. Instead, zero in on the most important features. You want to make sure the bones, or structure, of the home, is in sound shape with all major features in working order. Things like layout, size, number of bedrooms or bathrooms, and location should be at the top of your list, while things like granite counters, appliances, or landscaping should be toward the bottom. Getting too caught up in getting everything you want can cause you to pass on a lot of suitable homes in your budget. Have an open mind when you begin searching and remember that your home inspection will give you a clear picture of the most important pieces of your potential new home.
Be unique and personal in your offer
Sellers look at more than just offering prices when thumbing through offers on their property. Be personal with your offer and share a piece of you in it. Consider writing up a short buyer love letter where you tell the seller why you’d love to buy their home. Include a little bit about who you are, your family, and your own personal story. These have been known to win the sale, even with higher offers in competition. Another thing to consider is what would make the seller most happy. Maybe that includes a short (or extended) closing, a waiver on an appraisal, or, even, a short rent back period to allow the seller to find themselves a new home in due time.
Avoid offers that are lower than the asking price
In a seller’s market, offering lower than the asking price almost always sets you up for a loss. This tactic is a waste of time for both you, your realtor, and your sellers, especially if they are receiving multiple offers or homes within the community are selling within hours to days of listing. Instead, try offering just above the asking price at a figure that is comfortable for your budget. This shows the seller that you are committed and genuinely interested in their home.
Waive the contingency
Often, mortgages come with buyer contingencies built-in. In most cases, the contingency allows the buyer to back out of the agreement if they do not receive approval from their lender. This is a great protection as a buyer but can cause anxiety for a seller. Waiving the contingency lets the seller know that you are confident in your purchase and have no plans of backing out due to financial concerns or otherwise. This option adds extra security for the seller but should be used at your discretion with the guidance of your lender and real estate agent.
Buy in all cash if you can
If you’ve been saving to buy your dream home or have extra cash from the sale of your last home, now is the time to purchase a new home in cash. These offers feel the most secure to sellers as they know you do not have to climb through hoops to ensure pre and post-approval. Without the risk of a non-funded mortgage, you can generally close faster and provide funding more easily, which is a big deal for sellers. Cash offers also put the power back in the buyer’s hands, allowing a bit more wiggle room for negotiations.
We understand that purchasing in a seller’s market requires you to act fast and make decisions rather quickly. Although you cannot stroll through listings at a leisurely pace, you should still choose a home that you love and not choose to settle just because you feel you can’t score a home due to the current state of the market. Make informed decisions and take the time you need to choose a home that works best for you and your family. If you’re a current buyer or on the fence about purchasing a home this year, let’s chat, I would love to help you navigate the process and find a home you love for years to come.