With low-interest rates and rising rent costs, more and more people are taking the plunge into homeownership. While this is great news for sellers, it means that people who are looking to buy can expect to face high pressure and fierce competition over their potential dream homes. Thankfully, there are a number of ways you can prepare for the buying process that will give you an edge over competitors and help you cinch the sale.
If you are serious about buying a home, getting a pre-approval letter should be your first order of business. Getting pre-approved shows sellers that you are qualified, motivated, and, most importantly, that your offer is financially secure. Anyone can make an offer on a home, but without pre-approval, sellers risk wasting valuable time and money if a deal falls through. This is especially important in a seller’s market, where a lack of pre-approval is often enough for sellers to reject an offer outright.
Start the Loan Process Early
Though it may seem extreme, many experts suggest starting the mortgage loan process an entire year in advance, as recent regulations aimed at protecting buyers have also created more red tape. Securing a loan also requires a significant amount of documentation, including pay stubs, W2 forms, and federal tax returns, so it’s vital that you have enough time to compile the relevant information beforehand. Starting the process early gives you more time to navigate any potential issues and avoid nasty surprises.
Sweeten the Pot
In a seller’s market, small gestures that make your offer more attractive can make all the difference. If possible, look for ways to avoid offer contingencies, or ask about the seller’s preferred closing date. Consider even delaying buyer possession of the home for an extra week or two, so that the seller isn’t stressed out and scrambling to move–these small things can make a seller look at your offer more favorably if there are other potential offers at the same price point.
When it comes to viewing homes in a seller’s market, flexibility is a major asset. Keep in mind that most buyers are going to be touring homes and making offers on the weekend, so if you are able to take a day or two off at the beginning of the week to make the rounds, you may have the opportunity to make an attractive offer before everyone else gets to it. Many sellers are looking to make a quick deal and avoid all of the chaos and interruption that comes with the process, so having a flexible schedule can give you a major edge.
Know When to Pounce
Once you’ve found a home that you love, be prepared to make a fast, strong, and clean offer. That means offering a fair price, putting down as large of an earnest money deposit as you can afford, asking no favors, and waiving contingencies. In a seller’s market, new listings are often snapped up within a day or two, or sometimes even in hours, so know in advance what you are prepared to pay and what you won’t compromise on so that you don’t lose out on the home of your dreams by taking too long to considering things.
Buying a home is an enormous investment, and the fast-paced, competitive nature of a strong seller’s market can put a lot of pressure on a buyer to make moves before they’re fully ready. By using the strategies above, you can ensure that you are entering negotiations from the best position possible, armed with knowledge, leverage, and the confidence to be decisive when you finally find the home of your dreams.