Buying a home in a seller’s market? Don’t make these costly mistakes!
Home buying is an emotional process; especially when it’s a seller’s market. The real estate market fluctuates, making it difficult for buyers to navigate the offer process. In a seller’s market, time is not on your side, as other buyers may be lining up their best offer on the home that you are considering. Avoiding these mistakes can help you get the home that you want and beat competing offers.
Lowballing involves submitting an offer to the seller that is tens of thousands of dollars below market value. Buyers do this when they want the seller to come down on the sales price, but don’t want to pay anywhere near the list price.
Some sellers understand this process and will respond with a counter offer. In a sellers’ market, lowballing will most likely result in a flat out rejected offer, making way for other buyers to begin negotiations and secure a contract on the home.
If you’ve chosen a home that meets your “dream checklist,” don’t waste time with lowball offers. Offer fair market value or more if the home is in a competitive price range before another buyer gets their contract accepted.
Comparing Apples to Oranges
Once you’ve located the type of home you want, don’t set your offering price on a comparison to houses that you’ve seen in neighboring towns or communities. For example, if you looked at a home with much more square footage and a larger yard at a lower asking price, but it’s not located in an award-winning school district, you can’t expect the seller of a home in the most desired school district to understand your offer. When comparing homes, ask your Realtor to pull up homes that are in the same neighborhood as the home that you are making an offer on.
Making an Offer Without Proof of Financing
Verbal agreements don’t fly in a seller’s market. If you don’t have a prequalification letter from a reputable mortgage lender, the seller has no way of knowing if you can truly buy their home. If an offer comes in alongside yours and the buyer has a solid pre-qualification letter from a well-known mortgage company, your offer will be pushed aside.
Ignoring Seller Preferences
Read the MLS listing carefully. Ask your Realtor if there are any notes in their copy that refer to the seller’s preferences for a closing or inspection items. If they need to move by a certain date and you’ve given it to them, they’re likely to choose your offer over the others. If the listing shows that all appliances will convey in “As Is” condition, ask your Realtor to include those terms in your contract so that a counter offer isn’t necessary.
As a buyer in a seller’s market, it often feels like the sellers get everything they want. While the home buying process can feel out of control, keep the bigger picture in mind. If the home is in the right location, has the most important features, and is offered in your price range, the most important factor is that you win an accepted contract without a bidding war or paying too much over market value.
Implementing these home buying tips in a seller’s market will help you beat competing offers and win the seller’s approval. Time is of the essence in all real estate contracts and negotiations.