Buying a new home is almost never easy or straightforward. The fact is that a home is usually the single biggest purchase you'll make in your life. This means you better make sure to carefully consider all of the various factors to ensure you make a smart decision, which can equate to a lot of stress and constantly questioning yourself. Unfortunately, trying to buy a home in a seller's market can make the entire process that much more difficult and time-consuming.
While it may be easy to get your first choice in a buyer's market, a seller's market could see you missing out on numerous homes before one of your offers is finally accepted. For this reason, it is essential that you discuss the current market with your real estate agent upon beginning your search. This way you'll know how the market conditions will affect the home-buying process so you can prepare your strategy accordingly, and if you do find yourself facing a seller's market, consider using the following tactics to improve your chances of having an offer accepted quickly.
Be One of the First to See the House
While properties may stay on the market for weeks and months in a buyer's market, any decent home is likely to be off the market in days or even hours in a seller's market. In many cases, the first few people to see a home will already put in offers, which means that you could easily miss out if you're not one of the first showings. In many cases, if your schedule is too full and you can't make it to see the house until the weekend, you should probably give up hope on getting that house as it will likely be off the market before Friday evening comes.
Never Offer Less than the Asking Price
In a seller's market, it is not uncommon for owners to receive two, three, five or more offers within the first few days of the house being on the market. The fact that the owners will have multiple offers to consider means that there's almost zero chance of yours being accepted if you offer less than the list price. Homes almost never sell for less than the asking price in a seller's market unless they have some serious problems, so you can almost guarantee that the owner will receive at least one offer that meets their asking price. This means that you'll need to make sure that you offer at least the asking price, and in many cases, you'll need to offer more than the list price to ensure you actually end up getting the home you want.
Offer a Larger Earnest Money Deposit
The earnest money deposit is something you'll need to put down when an offer is accepted, and it's essentially a guarantee that you're committed to buying the home and won't back out after the owner has already taken it off the market. In the average market, it's usually a good idea to offer around 1 to 2 percent of the total price as an earnest money deposit. However, you might want to consider offering anywhere from 3 to 5 percent in a seller's market. Unfortunately, many people don't have that kind of cash lying around at the ready, in which case, it's usually a good idea to save up well before home shopping, and sometimes worth considering a short-term option like guaranteed payday loans if timing is the only thing stopping you from having the available funds.
Accepting an offer and taking the home off of the market comes with a certain amount of risk for the homeowner, and the earnest deposit is a way of mitigating this risk and ensuring that the buyer won't back out. By offering a larger earnest money deposit than others, you should be able to convince the seller that you're truly serious. In this way, it is more likely that they will accept your offer since by doing so their own financial risk is decreased.
Your real estate agent can be a huge help and should be able to offer you plenty of advice to improve your chances of success in a seller's market. Nonetheless, you still need to be prepared and ready to pull the trigger. You'll likely be competing with potentially hundreds of other buyers, and any hesitation on your part could easily see you missing out on the home of your dreams.
