If you find yourself embroiled in a bidding war when purchasing a home, here are a few strategies that may help you triumph over your competitors
Depending on your location, your experience as a home buyer, and the state of the market, thehome-buying process might feel a bit intimidating. If you’re in the market to buy a new home this Spring, it’s important to equip yourself with the tools and information that will give you the most value from your purchase and allow you to make the right decisions in a seller’s market. Buying a home can be a stressful task, but with these tips you will have more insight and more confidence that you can find the home that’s perfect for you.
Tips for Buying a House in a Seller's Market.
Decide exactly what you’re looking for
Find out your price range first (decide what you can afford based on mortgage and all other costs of owning a home), and then write down your checklist of needs and wants. Your needs are those qualities that will make or break the decision, while the qualities on the “wants” list can only enhance potential properties. Once you know your price range and your needs, stick to those standards and only consider houses within your reach. Having these goals at the outset will make you more focused.
It is exceptionally complicated to buy a property right now. The team that wins the Stanley Cup has an incredible amount of skill, knowledge and impeccable teamwork. We’ll need the same.
Buyers’ agents have been lazy and lackadaisical with buyers, which won’t cut it in this market. If your AGENT doesnt have the confidence and courage to step up and represent you, you shouldn’t be working with them. They are doing them a disservice. This means interviewing your potential agents, testing their knowledge of the market’s complexity, getting the exclusive buyer contract signed before you see any homes, and then building a strategy with them to ensure a successful purchase.
Build a strong strategy
Gather all the essential information to help with this. How big is the buyer pool? Are all winning bids unconditional? What are the prevailing listing strategies? While the seller has the lion’s share of power, how can you earn back some power? How will you uncover information about the seller through their listing agent? Your agent must have an in-depth understanding of negotiation principles to win.
1. Place your deposit with the offer
2. Write a property love letter
3. Have your agent present the offer in person when possible
4. Figure out the most important terms for the seller
5. Have a flexible closing date
Understand that there will be pressure to act quickly
In a seller's market, you have to move fast if you find a home that’s right. Make your offer as soon as you can, but never act on something that’s not right. Don’t buy a home just because you feel pressured to make an offer before others do—you'll end up with home buyer's remorse. If it’s right, you’ll know. Once you make your offer, stay on top of the process so you can counter quickly if necessary.
Make yourself most valuable to sellers
In a seller’s market, you’ll likely be facing many other potential home buyers when you decide to make an offer. How can you make yourself, as a buyer, most appealing to the seller? It’s pretty clear that the more cash you have up front, the more power you will have in the deal. However, there are other ways to stand out. Being pre-approved for your mortgage will make you a more stable contender so be sure to get a pre-approval letter from your lender. Be flexible on closing dates and simplifying/eliminate contingencies to make the process smooth and swift for the seller. Even crafting a letter to the sellers explaining how much you love their home, can put you at a competitive edge. Put yourself in the seller's shoes—if you were selling this home, what would you find valuable in a buyer? We do a good job of selling you to the seller's utilizing some great strategies, and a carefully crafted email from us to the listing agent that accompanies your offer.
- Get pre-approved for a mortgage. By having a pre-approval letter handy to show that you are qualified for a mortgage loan, you’ll be able to assure sellers that there won’t be any delays to closing the sale due to your finances. You could even have your lender write a specific pre-approval letter for the home on which you are making an offer to show that you are ready and able to buy.
- Offer a bigger down payment or more earnest money. While raising your overall offer price will certainly give you an edge over other buyers, simply increasing the amount of your deposit will also help show the seller that you are serious. HAVE YOUR DEPOSIT PREPARED, having your deposit cheque ready will go a long way!
- Consider waiving contingencies. Contingencies offer important protection because they allow you to walk away from the sale or renegotiate price if the inspection reveals significant issues with the home, or if a discrepancy in value affects your mortgage loan. When facing a bidding war, however, you might consider waiving these contingencies—but be aware that this is a risky move and it’s probably best to consult your realtor first.
Let go of your belief about the market value
When a property sells for over the asking price, it is not selling for over market value. Market value is simply the value that a buyer and seller will agree to when neither is under undue duress. When supply is low and demand is high, the market value increases quickly. When the market is rising fast, you can’t use past sales to indicate market value. Past sales tell you what a different buyer was willing to pay for a different property in a different market. That information is valuable, but it is not necessarily tied to market value.
None of us can know where this market is going. The best economists in the world don’t understand the current market complexities. The real estate market could collapse. It could continue to increase dramatically. We don’t know.
Hire an experienced real estate agent you can trust
Especially in a undersupplied market, having a trusted agent on your side can make all the difference. The representative will help you search, negotiate, understand contracts, and ultimately get the best deal. Look for an agency with a lot of experience! In a seller's market, having an experienced and energetic buyer's agent is even more important. You'll want someone who knows how to hunt down a good home even when inventory is low and someone who can spot and negotiate a good deal even when the market is hot. Find an agent who works to find you homes, and is not just reacting to your showing requests and homes you find. Your agent should present you with more than just MLS listed properties. See how we help our buyers here.
Keep an open mind
It’s very unlikely that any house you find will be perfect in every way. Whether it lacks a few of the assets you desired or has a different closing date than what you anticipated, keep an open mind that you can make it work. Be flexible and discover opportunities in homes that may initially seem flawed. With a little TLC, you can make a good house into a great home.?