With limited inventory, and no clear signs that new construction will be catching up any time soon, homebuyers are forced to face a seller’s market. In a seller’s market, competition among buyers is strong, and the pressure is on to place an offer before someone else does. However, there are a few key steps you can take for a competitive edge in a seller’s market.
Know Your Local Market. It’s crucial to know local market conditions, more than ever in a seller’s market. You should get a firm grip on housing prices, inventory levels, information about different neighborhoods, development plans around town, and as much information as you can find (Sign up for our newsletter and, once a month, we’ll send you market reports for the Bozeman, Montana area). Realtors® are also a valuable resource for exclusive insights about market conditions, and can serve as your trusted guides in the real estate market.
Get Pre-approved for a Mortgage. This is huge, but surprisingly ignored by most buyers. From what we’ve experienced as Realtors®, most buyers will start shopping around with an estimate from an online mortgage calculator. Not to be the bearer of bad news, but online mortgage calculators can greatly exaggerate what you can truly afford.
If you’re serious about buying, don’t rely on what you find online. Contact a loan officer and get pre-qualified before you start shopping around. This has several major advantages, including:
#1 Saving Time. It would be a big disappointment if you come across a home that you absolutely love, but is sold before you’re ready to make an offer. Having your finances in order will streamline the process, and allow you to place an offer before other buyers.
#2 Signals to Sellers That You’re Serious. Any offer that isn’t backed by a pre-approved mortgage will likely be ignored. Having proof of financing in-hand shows sellers that your offer is serious, giving you the advantage over other buyers that skipped this pre-emptive step.
#3 Knowing Your Budget. This may be stating the obvious, but it’s important to get an accurate estimate of what you can afford—buying a home is no small deal! A pre-approval from a loan officer is the really the only way to get an accurate estimate, not online mortgage calculators.
Start Shopping Early. While it may be a seller’s market, it can be seasonal. The winter months are typically much slower than the summer months, so buyers may find better leverage and negotiating power earlier in the year. The downside, however, is that slower periods typically means less houses on the market, so you’ll have less to choose from.
Act Fast. In our market, we’ve personally seen listings sell within just hours after being active. This is why the previous tips are so crucial—you need to be ready. When you see a house that you love, and absolutely must have, don’t expect the seller to wait for you. Be prepared to drop everything you’re doing and go see the property, and don’t spend too much making your decision. While you should never buy on impulse, you also need to be diligent if you plan on scoring your dream home in a seller’s market.