11 strategies on how to buy your home in a seller’s market
Dear home buyer,
Homebuying is a big decision and for some the journey takes more time than for others. For those buying in a seller’s market there can be an additional hurdle: competition
A seller’s market is when the seller has leverage in the sale with buyers and he or she knows it. The seller expects multiple offers on the home they are selling and have options to choose from. The seller knows that buyers want what they are selling and this gives sellers most of the control in deciding who to sell their home to.
Not to worry though, there are ways to navigate a seller’s market to set yourself up for success. Below are the top 11 strategies to keep in mind when navigating through this.
1. Hone in on your needs vs. wants
It’s sometimes a needle in a haystack to find the absolute perfect home. Upfront, at the start of your search, it’s best to split what you need vs. what you want and be open to compromises. Keep in mind, there are things you can change about a home and those that you cannot change. For example, renovations can be made, but the location of the property cannot change!
2. Do your homework before you go to the property
Pictures mean a 1000 words, but a virtual tour means even more. There is plenty of research you can do about a property before you make the trip to go see it. If you know a home doesn't fit your needs, don’t spend your time going to an in person viewing.
3. Get your pre-approval, and get as close to a 20% downpayment as you can
It’s important to know what you can afford and if you’re using financing, a pre-approval from a reputable lender will show you that. Also, a pre-approval from a bank as part of your offer shows the seller your ability to truly purchase the home. Getting as close to at least a 20% down payment sends a great signal to a seller.
Check out Nuhom's preferred lender list
4. See the home at your earliest convenience
In real estate, time is of the essence. Day or night, the market is always open and if a seller finds a deal that works for them, they can choose to accept it at almost any time. Tour the home, spend the time, and do it early if you can.
You can set up a private home tour at the top of Nuhom's site.
5. Inspect early if you can
If your intention is to do a home inspection, if possible, consider doing one before making an offer. This small investment gives you better information and takes the inspection contingency risk out of the offer and becomes one more reason for the seller to go with your offer. Explain in your offer that you have already completed a home inspection and that you've factored your findings into the offer.
Feel free to reach out to Nuhom to connect with our preferred home inspector.
6. Make a compelling offer, but balance your risk (4 important points here)
a. Think about writing the seller a memo about yourself (and your partner/family if you have one). Write about why you love their home so much, talk about your employment a bit to give the seller good vibes about your financial ability to purchase, and tell them about yourself and how you plan to use the home. This works especially well with sellers who have owned the home for a long time and may have an emotional attachment. This does not work as well when the seller is a builder or developer.
See an example of a seller memo that you can modify for your own use.
b. Use pricing comparables to price your offer, but price aggressively if you know it's the home you want and if it fits many of your needs! Make sure your pricing is something you can still afford and it falls within your budget and. Be sure to understand if you are paying at, above, or below market for the property.
Reach out to Nuhom to get comparable sales data on a home you're interested in.
c. Make an offer with less contingencies if you can. Sellers see more contingencies as more potential risks of the purchase falling apart. Many times buyers include contingencies that over protect themselves. Understand why you are including the contingencies and what you are protecting yourself from vs. just including them to include them. Don't get over insured.
d. Try to match the closing date the seller has in mind... This helps sellers prepare to move out or move on with enough time.
7. Making an offer early
Sometimes a seller is willing to review an offer early. However, if the property just hit the market, they will want to give all potential buyers a chance to make an offer. They may accept an offer early, but only if it's a grand slam offer that the seller cannot refuse to accept.
8. Keep in mind that the asking price is just a number
Some of your pricing may factor in the asking price, but the asking price is the seller and seller agent’s way of getting buyers interested in the property. It’s simply to get eyeballs looking in their direction. The property could be priced low, often this means more people may make offers on the property. To be competitive, you should strongly consider the comparables and recent similar sales over the asking price to price your offer.
9. Your first offer may not work so have a back-up home in mind
Competition can be tough in a seller’s market. If your first offer doesn’t work out, learn from it. In fact, if your offer did not work out, from time to time, the buyer who did get an accepted offer may pull out of the deal giving you a second chance. Keep an eye on the property status or check in with your buyer agent. Also, if you have additional homes you like, keep them in your back pocket and consider them when the time is right.
10. If you don’t want to price aggressively
Wait for a property to sit on the market, let time do what it does best. After several weeks on the market, the seller may have more of a willingness to lower price or loosen up on unwanted contingencies.
11. Be patient
Your time will come and the stars will align on your dream home!
Buying your home is a beautiful thing, let's make the process to get there a bit easier. At Nuhom, we work to make home buying simple, transparent, and more affordable. When you're ready, we hope to help you with your home buying journey.
Nuhom is a Boston based full-service real estate tech company making home buying convenient, fast, and rewarding. We have dismantled the traditional home buying process and replaced it with innovative technology, far fewer hurdles, and more savings for the modern homebuyer. Learn more at www.nuhom.co