When you need to buy a home in a seller's market, you're faced with unique challenges. Homes tend to sell more quickly and for a higher price than in a buyer's market. It's probably best to work with an experienced real estate agent to guide you through the bidding process. There will likely be several bids on a home and you may keep getting outbid if you don't approach a seller's market in the right way. Here are a few tips that might help.
Sell Your Home First
If you currently own your home and selling it would free up enough cash to help you qualify for a loan or put you in a position to pay cash for a new home, then selling first is a good option. Buyers may not waste time on buyers with bids that are contingent on selling a home or on getting a loan. Approach a seller with cash or a mortgage loan already approved and you may have a better chance of getting the home you want.
Prepare For A Bidding War
You should expect to pay top dollar for the home you choose. That means you may have to settle for a house with fewer amenities than you like so you will have money left for a bidding war if it comes to that. When the number of homes for sale is low, you'll have a lot of competition for houses when they come on the market. The homes may sell in a matter of days, so you'll need to be in a position to make quick decisions. One thing you have to decide is the max price you'll pay for a particular home. The home may sell above the listing price, so negotiating for a lower price may be out of the question. Instead, in a seller's market, you may end up paying much more than you expect due to a bidding war, so you may need to look for homes in a lower price range to begin with.
Get Your Finances In Order
One of the most important things you can do when you're shopping for a home in a seller's market is to get your finances in order so there is no uncertainty about being approved for a loan and coming up with a down payment. Sellers won't be desperate. Instead, they'll be looking for the best offer, which is probably the highest bid with cash or an approved mortgage loan. You may also need more money for the earnest money deposit when you make a bid on a home than you would in a buyer's market. In addition to having good credit and steady income, you'll need to have enough savings to fully fund the expenses of buying during a tight market when prices and expenses are higher.
You shouldn't let a seller's market scare you away from buying a home. It's still possible to get a great home at a good price when you have an experienced real estate agent helping scout for houses and offering advice. You just need to have your finances in order so you can make quick financial decisions before someone else moves on the home you want.