Buying in a Sellers Market: 6 Tips for Buyers

Posted by Lauren Schneider on Tuesday, January 7th, 2020 at 11:59am.

When You're Buying a Home in a Seller's Market: TipsA seller's market is a market condition that typically arises from a low inventory of homes in a desirable area. High prices and an overflow of motivated buyers make it difficult to purchase a home for an affordable price, and in some cases, getting a house at all can be difficult. If you're a Gleneagle home buyer who would like to purchase a home in a seller's market, here's what you need to know.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

1. Know What You Want

People who don't know what they want will often hesitate before making an offer. In a seller's market, people who hesitate to make an offer will often get beat out by other buyers who make the offer first.

Buyers who know what they want often feel more comfortable making a fast offer on a home, before any other buyers. Getting the offer in front of the seller first can increase the likelihood that the seller will accept the offer.

2. Look at Listings Daily

A buyer who is hoping to make a fast offer on a home must look at listings and visit new homes daily. This requires the buyer to keep a flexible schedule and maintain close contact with their real estate professional.

3. Get Pre-Approved

Pre-qualification is the first step in the mortgage approval process. To become pre-qualified, the buyer need only answer questions from the mortgage lender.

Pre-approval is the second step in the mortgage approval process. To become pre-approved, the buyer must provide supporting documentation demonstrating their financial status. Pre-approval is a rigorous, time-consuming step. At the end of the pre-approval process, buyers are given a letter to show they have been pre-approved for a mortgage.

Sellers look favorably on buyers who are pre-approved because they have a higher likelihood of being approved for a mortgage. This can be the competitive edge that some buyers need to stand out from their competition.

4. Offer a Large Earnest Money Check

The earnest money check is a check the home buyer provides to the seller to show they are serious about purchasing the home. In the event the buyer cancels the home purchase contract outside a contingency clause, the earnest money check is paid to the seller.

The bigger the earnest money check, the more the buyer has to lose in the event they decide to cancel the home purchase contract. Larger earnest money checks make the seller feel more confident in accepting an offer from a buyer.

5. Don't Try to Negotiate

Bidding wars are common in a seller's market, and many times homes will sell for more than the asking price. Buyers who try to negotiate a lower price are likely to lose out to buyers who offer a higher purchase price.

6. Write an Offer Letter

One of the ways some buyers endear themselves to some sellers is by writing an offer letter. The offer letter is a letter from the buyer to the seller. The purpose of the letter is to put a human face on the offer. In the offer letter, buyers usually identify the people in their household, and discuss what they like about the home they're trying to buy. The offer letter can help an offer stand out so the seller might choose that buyer over others.  However, offer letters could result in unintended Fair Housing Act violations, so they are not used in all markets. Be sure to ask your agent if this is an option for you.

Work with a Real Estate Professional

If you're a home buyer who would like to purchase a home in a seller's market, it helps to get guidance from a professional. Contact a real estate agent who can give you advice. Your real estate professional can help you be prepared to make a competitive offer on a home, so you can hopefully buy the home that's right for you.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Lauren Schneider

Lauren Schneider, Real Estate Agent and Military Relocation Professional (MRP)

Lauren Schneider has lived in Colorado Springs for nearly 20 years and knows that the military is what keeps this town ticking, which is one of the reasons she's chosen to pursue her dream of helping military families with all of their homebuying needs. Learn more about Lauren or start your home search now

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