Are you looking to purchase your very first home and have been warned by your real estate agent that it is currently a seller's market? If so, you may be wondering what this means and how it will affect the home-purchasing process. Here are a few things to keep in mind to ensure that everything goes smoothly.
Home Inventory Is Low
A seller's market typically means that the current number of homes for sale is low, while the number of people looking to purchase a home is high. This creates a lot of competition among buyers that favor the seller. However, this does not mean that you are out of luck to purchase a home at this time. You can still make a successful offer if you are prepared for the challenges that await you
Be Prepared For Multiple Offers
It is common for homes to receive multiple offers when it is a seller's market and for those offers to come in soon after a home is put up for sale on the real estate market. This means that you cannot come in with a low price and be ready to negotiate. You'll likely need to make an offer above the list price and hope that you beat out other buyers.
You can also work with your realtor to use different techniques to win a bidding war. For example, escalation clauses can be used to show that you are willing to go above the best offer on the home within reason.
Have A Pre-Approval Ready
Sellers will be looking for ways to disqualify buyers if there are multiple offers on the table. One technique is for the seller to ignore offers that come from buyers without pre-approval letters from a mortgage lender. The pre-approval letter is your way of saying that you have a bank willing to lend you money to secure financing. Without the letter, the seller could be wasting time on you to only find out in a month or two that you can't get the mortgage that you need to secure the house. This wastes everyone's time in the transaction, and a seller will try to go with a more secure option if they have one.
These are just a few things to keep in mind when the real estate market favors the seller. For more tips on how to handle your home purchase or for more inforamtion on real estate, be sure to work closely with a real estate agent in your area.