You stop by an open house only to find 15 other buyers looking at your dream home. By the next day, there are ten competing offers, and the bidding war begins. In our current competitive real estate market, this may sound familiar to anyone shopping for a new house. When the market shifts to a seller’s market, your home buying strategy should change with it, and we’ve got the tips to help you succeed.
Let’s start at the beginning: a seller’s market means sales are outpacing the number of homes available. When the National Association of Realtors released its latest quarterly Metropolitan Median Area Prices and Affordability report, it revealed the growth in existing-home sales over the last three months of 2017 has led to an all-time low in home inventory and steady price growth. If you’ve been house hunting lately, this won’t be news to you. Though buying a home in a competitive market can be challenging, you can still find your dream home. But, there are lots of buyers out there looking at a limited inventory of homes for sale, so it’s essential to have a plan.
Understanding interest rates is fundamental to the home buyer. A low interest rate means that buyers won’t be paying as much to lending companies on their mortgages. This can be a significant incentive to buy since a one percent shift in the interest rate can mean thousands of dollars in savings over the life of a loan on a major purchase such as a house. Keep yourself informed by paying attention to the market, interest rates and partnering with a knowledgeable mortgage lender.
A good realtor with expertise in your area can help you find the right home, at the right price, as soon as it hits the market. They can also help you write a competitive offer and guide you on when to up your bid or walk away from an escalating bidding war. They also have connections to know what’s coming onto the market – or hasn’t even hit yet. The last thing you want is to be constantly losing out to buyers who are better positioned to get their offers submitted more quickly.
If you’ve ever sold a house, you’ll understand that most sellers don’t enjoy having buyers looking at their home at all hours of the day and night for very long. They would much prefer to sell their home quickly and move on to their new life. If you and your realtor can find a new house on the market and write a strong offer quickly, your chances of acceptance are significantly better than an unprepared buyer.
Getting preapproved means the seller will know right away that you’re capable of backing up any offer you make. Plus, you will know how much you can up your offer price while still staying within your payment budget and loan approval. A substantial deposit may also be more appealing to a seller so talk to your loan officer as you begin the mortgage preapproval process about what you can realistically afford.
A competitive housing market is not the time to offer less than a fair list price, especially if there are multiple offers. Expect to be in competition with other buyers for a home, and be prepared to pay asking price – or over it, if your budget allows. Now is the time to make things easy for the buyer. Even if you’d like them to paint the front door a new color or leave the fridge behind, if it would be an inconvenience that might ding your offer, think twice. Would delaying possession to help the seller take a few days to move after closing seal the deal? If it works with your timeline, add it to the offer.
No matter what house you choose to buy, BrandMortage is here to help select the right loan to finance your dream. We offer an extensive menu of products to fit your needs and I look forward to speaking with you further!
Rebecca Richardson is a Charlotte mortgage banker who excels at helping clients choose the appropriate mortgage strategy and enjoys demystifying the financial process on her blog at rebeccarichardsonmortgage.com. She can be reached by email or at 704.488.8883.