9 Buying Tips for This Seller's Market
Even though there’s been an uptick in interest rates, there are no indicators that 2022 won’t remain a seller’s market for residential real estate.
The advantage for sellers in the current market is the simple fact that there are more potential buyers than there are homes for sale. Bidding wars bring purchase prices to above asking, and buyers have less leverage to make extra requests or demands. Sellers can be patient, confident they’re going to receive multiple offers on their home.
If you are currently searching for a home or will be soon, you need to have a solid strategy to compete with other buyers. To help you do that, here are nine tips that will give you a fighting chance of getting to closing day on your dream home.
Tip #1: View homes quickly
Being pre-approved is a sure way to show a seller that you’re serious about buying their home.
Tip #2: Don’t add too many contingencies
Some features might be essential in your new home, like a bedroom on the first floor or a two-car garage. But some things can be replaced or upgraded, like refrigerators and countertops. Adding contingencies for these replaceable items can put you at a disadvantage when you’re competing with other buyers who aren’t asking for them.
While you may have to make an offer contingent on selling your existing home, too many contingencies can sour a buyer when they’re comparing your offer to others they receive.
Tip #3: Get pre-approved for your loan
Time is not a luxury for you in a seller’s market. Being pre-approved is a sure way to show a seller that you’re serious about buying their home. It also is a significant advantage for you if the seller is entertaining offers from buyers that haven’t taken the time to get pre-approved. In a seller’s market, homeowners won’t wait if they don’t have to.
Tip #4: Submit your best offer
In a seller’s market, there’s a good chance you won’t have the opportunity to submit more than one offer, so make that first offer count. It can be an excellent strategy to offer more than the asking price.
Tip #5: Be prepared for a bidding war
Unfortunately, if a seller has multiple offers in hand, you’re likely heading into a bidding war. You’ll have the opportunity to adjust your offer as much as you’d like to outbid other buyers, but know what your limit is, and don’t be surprised if the home’s price is pushed out of your budget.
Tip #6: Make as large a down payment as you can
No matter what type of loan you select, it’s a sign of good faith to a seller when you offer to pay more down than the minimum amount required by the lender. It shows you’re in good financial condition and serious about purchasing the home.
Tip #7: Pay cash if possible
To most sellers, the best buyer is a cash buyer. The seller doesn’t have to worry about lengthy delays with the underwriting process. A seller may choose a cash offer over the highest bidder relying on a loan. A cash offer helps you avoid the fees and interest that come with taking out a mortgage.
Tip #8: Add an escalation clause to your offer
An escalation clause can also provide you with a competitive edge, particularly if a bidding war is involved. This clause means you’ll outbid other offers up to a specified maximum price.For example, you may submit an offer saying you’ll pay $250,000 for a home, but if the seller receives an offer higher than that, you’ll raise your offer to $300,000.
Tip #9: Waive the appraisal contingency
By waiving the appraisal contingency, you’re saying that you are prepared to bring more money to the table if the home doesn’t appraise. This is a real advantage in neighborhoods that have surging property values. It will set you apart from other buyers, but do not do this unless you’re in a stable financial condition to handle risk easily.
Trust Texell’s Home Loan Heroes for your next Home or Land Loan. We’ve been helping people achieve their financial goals since 1948. Call us today at 254.774.5104 and let us help you get pre-approved and into your dream home.
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