It’s A Seller’s Market; Buyer Beware
Competitive is the best way to describe today’s market place. There are fewer homes available than needed to meet the demand of buyers so sellers are in the driver’s seat. If you’re a buyer, you need to be prepared for the purchase process before you begin looking. By following these guidelines your chances of success improve greatly.
- Get Pre-Approved for a Loan. When a buyer is pre-approved it means that they have submitted a loan application to the lender and provided all required documents such as bank records and tax returns to the lender. The loan is pre-approved only after the lender reviews and verifies all the buyer’s required documentation. Being pre-approved is much different than being pre-qualified. A pre-qualified buyer has spoken to a lender; the lender has checked their credit score and provided a pre-qualification letter assuming that all the information that they have been provided is true. As you can see, there’s a big difference between the two. What is important to know is that the seller and the seller’s real estate agent know the difference. All things being equal in an offer, Seller’s will always choose a pre-approved buyer over a pre-qualified buyer. If you are serious about buying, get pre-approved! Lastly, include “proof of funds” with your pre-approval letter so that the seller has the confidence that you cash in the bank for the down payment.
- Be Ready to Write an Offer. When your Realtor tells you that a house meeting your criteria has come on the market, be ready to drop what you are doing and go see the house. Homes are selling very quickly and in this market it is not unusual for a Seller to receive offers in the first 24 hours. The old acronym, “you snooze, you lose” has never been more appropriate.
- Make Your First Offer, Your Best Offer. This is not the time to “bottom fish” or “test the market” unless you are prepared to lose the house. Your Realtor will provide you with comparable sales to ensure that your offer is sound and appropriate for the market. You don’t want to overpay for a home but if you are serious about buying a house you need to be prepared to pay market value
- Sweeten the Pie! Make it easy on the seller to say yes to your offer.
- Offer to allow the seller to stay in the house for a few days after closing.
- Shorten the timelines. There is a great deal of uncertainly for the Seller during the option period so make the time frame for doing the property inspection as short as possible by prescreening inspectors and having them on standby.
- Don’t ask the seller to pay your closing costs or other negotiable costs such as the survey unless you cannot purchase without doing so.
- Stay Calm & be Rational. Be prepared to lose a time or two. That’s tough to hear because there is an emotional connection to a home that you can visualize your family living in. When things don’t go as planned it is natural to be disappointed. Stay the course; evaluate what went wrong and how you can be better prepared for the next offer. Finally, don’t allow yourself to lose site of the fundamentals of the process and think that winning at all costs is the goal. Buying a house is a business decision and in the end should be a win-win for both parties.
Terry Roberts Owner/Broker RE/MAX Landmark