- Buying a house in a seller’s market can be tough due to several buyers for a limited number of properties.
- If prices begin to decline, the buyer-side competition could increase even further in a seller’s market.
- Managing finances, keeping a simple yet effective offer, and finding a good agent are some crucial tips to reaching a deal in the seller’s market.
Purchasing a property in an extreme seller’s market can be daunting for many potential buyers. High auction clearance rates for properties that are priced at higher than the usual rates are common when sellers gain the upper hand in the market. Meanwhile, the seller’s market is marked by high demand for property, even with high prices.
Finding a property in such a market can be tough, especially if prices begin to show even small signs of a drop. The prospect of falling property prices could further fuel the demand for property and add to the demand-side pressure.
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This may lead to a situation where there are too many buyers and not enough houses to be sold, like the situation seen in the early days of the COVID-19 pandemic. Those still searching for a house in this market would have to give in to the price pressure and pay exorbitantly high prices. Most importantly, some buyers may not even be able to find the right property due to good and reasonable properties quickly being taken off the market.
However, here are some tips that can help buyers to purchase their ideal property in a seller’s market:
1. Prepare for financing
Perhaps the most important part of buying a property is securing funds to finance such big purchases. Buyers should have figured out the mortgage approvals even before initiating the buying procedure. A pre-approval for a home loan could be a good solution in this case. The key to surviving a seller’s market is acting on time and quickly.
This includes getting a mortgage quote even before the property search begins. It can help to outline how many monthly repayments would be affordable, given one’s income and other financial obligations. Buyers often lose track of their budget and offer a higher bid to outdo the competition. Nevertheless, it is crucial to pay attention to the budget and not spend beyond expectations.
2. Keep the offer simple
Most buyers provide a detailed offer that comes with contingencies and requirements. These include conditions such as inspecting the house frequently and receiving a mortgage commitment before the buying process begins.
While these conditions are necessary in normal times, they can often discourage sellers from participating in a transaction. In a fast-paced seller’s market, most sellers could view these contingencies as a potential hindrance to a deal being finalised. Thus, it is imperative to keep the offer simple and concise. However, a certain minimum criterion should be specified based on which the offer is made to ace the real estate game.
3. Put your best foot forward
There is no time to waste in a seller’s market as there are no counter offers made by sellers. Thus, it is important to keep the best foot forward while putting together an offer. Once buyers find their ideal property, it is important to give the best possible shot at obtaining it.
It is normal for owners to see about a dozen offers in a single day, or maybe even more. Thus, they do not feel the need to put a counteroffer and instead respond to the best among the options. And the best offer is not only a simple and clear one but also the one that has the potential to beat others in the game. Offering the highest possible price within their budget increases the chances of a buyer being picked by the seller.
4. Find an experienced agent
A major part of the buying process involves hiring an experienced and skilled agent to complete the job. Buyers may often feel locked out of the market as they themselves do not get to experience the buyer-seller interaction. Thus, agents form a critical part of the buy-sell chain as they help facilitate the deal.
Many property market agents are skilled at negotiating and reaching a deal under normal circumstances. However, when market conditions are tight, experienced agents tend to handle the job better than other agents. Such agents can help buyers find a property quickly as they are even aware of the listings that are not quite public yet.
5. Add a personal touch
Since most buyers cannot communicate with the sellers directly, there can be a feeling of a disconnect between them. Adding a personal touch to the offer, such as a letter, can make the deal more appealing and can give the seller a chance to make a mindful decision.
Families in urgent need of a house can state their urgency in a letter and develop a stronger connection with the owner. This can also help the owner take the decision faster and make a more ethical choice in certain cases. Buyers can add small details in the letter, such as mentioning a local bakery their kids are fond of or talking about why they like a particular neighbourhood.