A home buyer does not want to be caught off guard in a seller’s market. It’s one of the reasons that the most important thing a home buyer can do is trust his or her real estate agent to advise on market conditions. If it is a seller’s market, it could very difficult, if not almost impossible, to buy the first home a buyer wants to buy.
Because home buyers generally have very little interest in the real estate market when they are not buying a home, they don’t always know how the market moves from one season to another, much less from month to month. It is often uncomfortable for a buyer to be told the market is a seller’s market when the buyer may believe otherwise — especially a buyer who is trying to buy in a down real estate market.
Markets can change almost overnight. When the market changes to a seller’s market, a buyer’s home buying strategy needs to change with it. In a seller’s market, a home buyer is unlikely to be successful using the same techniques practiced in a buyer’s market.
Preparing the Home Buying Offer in a Seller’s Market
Time is of the essence. Multiple offers happen with more regularity in a sellers’ market than a buyer’s market. That’s because by its very nature a seller’s market is defined in part by low inventory and lots of home buyers. A beautiful home that is priced well can attract more than one offer. Remember, you might not be the only buyer.
- Price. Price is not always the most important factor. But do not offer less than list price. Realize you may need to offer more than the amount the seller is asking.
- Earnest Money Deposit. A larger earnest money deposit might look very attractive to a seller. Ask your agent for advice on the deposit; then consider doubling or tripling that amount. You’re going to pay it anyway at closing.
- Don’t Request Favors. This is not the time to ask the seller to give you the refrigerator or washer and dryer, or part with fixtures, or paint the front door.
- Delay Buyer Possession. If it is customary for the seller to move at closing, give the seller a few extra days to move. Another buyer probably won’t think of this maneuver, and the seller will look more kindly upon an offer that lets them move at leisure.
- Submit Preapproval and Proof of Funds Documentation. If your preapproval letter is from an out-of-area broker or lender, get a local preapproval instead. Match your preapproval letter to your sales price and date it the same day as your offer.