Tips for Buying a Home in a Seller’s Market

House hunting in a seller’s market can be tough. With not enough homes for sale, the challenge is for a buyer to make an offer that rises to the top and is accepted by a home seller. How do you do it? It’s all about being flexible and knowledgable. Here are six tips to bring your “A” game when buying a home in a seller’s market:

1. Work with a Real Estate Agent
When buying a home, it is advisable to have agent representation. This professional will first sit down with you to review the entire home-buying process so you know what to expect. Your agent will then search for homes that meet your criteria in areas you prefer. Your agent will know of homes coming onto the market and alert you to be prepared. He or she will also craft an offer to purchase that is strong and works in your best interest.

2. Know Your Budget
Understanding how much home you are qualified to purchase is very important – especially in a seller’s market. Getting pre-qualified for a mortgage loan is your first step in creating a home budget. Once you have this information, you can feel secure in making a strong offer on a home that includes documentation of this pre-approval.

3. Need vs Want – Type of Home and Location
Once you know how much you can spend on a home, the next things to determine are the kind of home and amenities needed. This list may include the number of bedrooms and baths, ranch-style home versus two story, type of floor plan or walkability factors. By keeping an open mind of what your major needs are, the more homes you can consider in a seller’s market. When creating your list, you need to consider: “I need” and “I wish I had”.

Remember, no home will be a “perfect place to live” – especially when searching in a seller’s market. Try to keep an open mind. If the home needs updating, will it work within your budget to make those changes? Can you make do with a floor plan that offers three bedrooms instead of four?

Location will also be a consideration. You may want a home located near your work, shopping or close to a highway.  If your preferred neighborhood is out priced for your budget, you will need to start looking at other nearby areas. Widening your search geographically will cast a larger net of available homes on the market.

4. Be Ready to Act Fast
A key factor for home buyers in a seller’s market is to make a timely offer. You will need to stay on top of the daily changes in the market and when a new property is listed, be flexible with your schedule to view that home immediately and be prepared to make an offer.

5. Make a Strong Offer
In a seller’s market, think through your offer strategy. A low-ball offer will probably be dismissed right away. Don’t nickel and dime the seller. Too many contingencies can be a turn off to a seller. Think through the occupancy date and what would be appealing to that seller.

6. Be Prepared For a Bidding War
You may get caught in a bidding war for that dream home in a seller’s market. You do not want to overpay and will need to have a limit set of what you are willing to offer. Know the market and do your research on home values.

With multiple offers, the seller has his or her pick of which offer to accept, start a counteroffer process or reject all offers. The seller does not need to inform any potential buyers of the multiple offer situation. If the seller counteroffers, other offers may still come in for consideration. A seller does not have to respond to offers in the order received or reveal the status of other offers. With multiple offers, the seller has the upper hand and can use it to increase the price or improve the terms of sale.

In such a bidding war, you can either give your best offer and hope it is the strongest, or have an escalation clause that lets you bid up to a certain limit. If caught in a bidding war, you need to be available to your agent so your bid remains active.

If your offer is not accepted, do not panic. There will be other homes for sale. Don’t let your impatience to buy a home ruin your budget by offering too much for a home. Know your limits.

With these six tips, you are ready to start your home search in a seller’s market! Starting looking for homes for sale.  Find a Sibcy Cline agent.

Why You Should Sell Your Home – Now

It’s currently a strong seller’s market with more buyers than sellers. Learn how to take advantage of this type of market and sell your home now:

Get a Very Good Price for your Home
With fewer homes on the market for sale and many motivated buyers (due to low interest rates and a strong economy), odds are in your favor to get top dollar for your home without price reductions. Many homes are receiving multiple offers – which means you will be able to select the best offer for your needs.

What you do not want to do is price your home out of the market. You have to be realistic about its current value. Your real estate agent will show you what similar homes are selling for and how a fair market value is determined. An overpriced home could result in an inconsistent appraisal, which will then give your buyer doubts or reason to possibly back out of the deal.

Less Time on The Market
Homes are selling at a faster pace. When your home sells in a short amount of time, you will not have to constantly clean and keep your home in tip-top shape for showings.

You will still need to prepare your home for the market initially. Staged homes show better in person and online – and will capture more interest among homebuyers. Read more about curb appeal and a staged home.

Selling As Is 
In a seller’s market, many buyers are not agonizing over every item that needs to be fixed in a home. You may be able to sell your home “as is”. However, if your home has structural issues or a roof that needs replacing, your price will need to reflect those concerns or it may be best to fix those issues first before going on the market to sell. Remember, a home in great shape will attract more buyers.

The Seller’s Market Won’t Last Forever
Conditions for a seller’s market can change, taking that advantage away. For example, if your area has a spurt of growth in new construction, you will now have more competition of available housing for sale.

Will I Find a Home Now that Mine Has Sold?
If your home sells quickly, you will now be in a position to find a new home right away. While you are selling your current home, you should start looking at homes for sale. If you find that dream home, you may want to consider a bridge loan that will give you the funds needed for a downpayment before your current home sells.

Another consideration would be to ask the buyers to be flexible on timing for the closing or occupancy of the home. You might be able to request a rent-back agreement.  This would help to alleviate moving twice.

One final idea is to move into a short-term rental while you look for a new home. Although this requires two moves, it will take away the pressure of finding that new dream home in a short amount of time.

Look at homes for sale.

Think About Selling Your Home Now!

Today’s real estate market is seeing a “supply and demand” issue. Simply put, there are not enough homes for sale in relation to what the home-buying market is demanding.

Supply and demand in real estate is represented by the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

Here is a guideline for pricing in various housing-demand markets:

1-4 months supply – This is a seller’s market in which there are not enough homes for the buyers’ demand. Homes appreciate in this type of market.

5-6 months supply – This is a balanced market and historically home values appreciate a bit above inflation.

7-8 months supply – This is a buyers’ market in which the number of homes for sale exceeds demain. Depreciation follows in this type of market.

In our region, we are currently experiencing a 4.1 month supply of homes for sale. This is the fewest active listings in the past eight years.

Nationally, there is a 4.2 month supply of homes available for sale which is the lowest seen since April 2005.

Information courtesy of the KCM Blog.