Curbing Buyer Expectations in a Seller's Market
The real estate market, like most other things in the United States, is controlled by supply and demand. When there are more homes for sale than there are buyers, we call this a buyer's market. If you're in the market to buy a home, a buyer's market is the idea time for you to buy. Seller's may be more willing to accept a lower price for their home because they don't have as much traffic due to the high inventory of homes on the market.
In a seller's market, the number of buyers is much higher than the number of homes on the market. For someone looking to sell their home, a seller's market is the ideal time. You are more likely to sell your home quickly and get full price due to the high number of buyers and lack of inventory to choose from.
Attempting to buy a home during a seller's market is more different than buying a home in a buyer's market. The Winston Salem area is currently in a seller's market so let's take a look at some ways you buyers can prepare yourself for your house hunting adventure so you don't miss out on the home of your dreams.
Money, money, money
As a buyer, you need to have your financing in place before you start your home search. Work with your lender to get a pre-approval letter to go along with any offers you make. If you're paying with cash, have your proof of funds readily available. Note: Pre-approval and pre-qualification are very different. A pre-approval letter is much stronger in the sense that a lender has most likely already viewed all your paperwork (bank statements, pay stubs, etc.) and checked your credit to verify you are worthy of a loan.
Tic Toc, Tic Toc
There is no time for lollygagging around as a buyer right now. The days of sleeping on it or going back over the weekend to take another look are gone! We are at a point where homes are going on the market one day and are under contract within days, if not hours. If you and your agent view a home that you really like, your offer needs to be in the hands of the seller before you go to bed that night. Otherwise, you will most likely miss out.
Low ball = No ball
During a seller's market, you will never hear a buyer bragging about the "great deal" they just got. If you expect to make an offer for anything less than the asking price and have it accepted, you are probably dreaming. Most sellers will have multiple offers to choose from so submitting an a low offer will get you scratched off the list immediately.
A seller's market is not the time to ask for favors. Asking a seller to leave the refrigerator, clean the carpets, or paint the bright orange room a more neutral color are just a few ways to get your offer rejected. When a seller has multiple offers to choose from, why would they entertain offers that will cause them more time or more money?
Make a Strong Offer
When it comes to making an offer, you want to make the strongest offer possible. Along with the tips above, here are a few things to think about:
As a buyer in a seller's market, you should be financially prepared to pay most or all of the closing cost. Asking a seller to pay the closing cost in a seller's market may keep the seller from accepting your offer.
Show the seller you are serious by offering a strong due diligence fee and/or earnest money deposit. Note: If your offer is accepted, this money is credited to you at closing. However, if you terminate the contract, your due diligence fee is non-refundable.