Most real estate experts will tell you to hold off buying a home until the market favors buyers. In a buyer’s market, there are more homes for sale than buyers, which means sellers are more willing to take lower bids just to get out from under their properties.
With that said, it’s still possible to find the home of your dreams for a good price in a seller’s market (when there are more buyers than homes) if you just follow the advice below.
Do Your Homework
Since homes are priced to sell and competition is fierce in a seller’s market, you need to gain as much information as possible about the property you’re interested in before making an offer. The more you know, the easier it will be to negotiate with the sellers on their level.
Identify any disclosures on the property, any property reports, and how long you have to make an offer on the home. If you are unsure of the process, ask your real estate agent for help as she will be able to guide you through the process and ensure you’re submitting documents on time.
Making the Right Offer
Once you’ve found a home you’re interested in buying, you need to make the right offer that not only entices the seller but also lets him know you’re serious about buying his home.
Again, your agent can help here. Ask about any concessions the seller may be offering with the home. Concessions are extras the seller includes to offset the price of the home. Your agent can fill you in on any concessions, but don’t ask for concessions right away as it might make the seller think you’re asking for too much.
The last thing you want to do is find your dream home and not be able to secure financing for it. Before you begin searching for a home, get pre-qualified by a lender. Prequalifying for a mortgage lets you know how much home you can afford, and it shows the seller you’re serious about buying a home.
Invoke an Escalation Clause
An escalation clause says you’ll pay a certain amount above the highest bid up to the maximum offer. Be aware, though, that a seller may counter your escalation clause with an offer of his own, which means he will increase the asking price of the home. It’s up to you, of course, whether you accept the offer or not, but it’s wise to sleep on it and contact your real estate agent for advice before making any decisions.
Buying a home is probably the biggest purchase you’ll ever make, and it takes more than just money. It takes diligence, research, and financial planning. When buying a home in a seller’s market, be sure to follow the advice above to ensure you get the most for your money.