Buying a home can be an emotional process. Searching for financing, setting a budget, attending open houses, dealing with home inspections, appraisals and more can make the entire process stressful at the best of times. But when you’re trying to purchase a home in a seller’s market, the challenges increase dramatically.
A seller’s market is one where there are more people wanting to buy homes than houses for sale. Low home inventory pushes up prices and bidding wars have become common in some areas of the country. In addition to higher prices and the need to make quick decisions, homebuyers face stiff competition from other buyers who are often ready to waive all contingencies. These tips can help make the home buying process less stressful:
- Set a Realistic Budget
Taking the time to determine exactly what you need and can afford before you start house hunting is important. It’s best to limit house shopping to properties that are within your established budget. People who look at homes outside their budgets often end up in the dangerous position of trying to stretch beyond their means or end up feeling unsatisfied with what they can actually afford.
- Get Pre-Approved for a Home Loan
By obtaining a preapproval for a mortgage before you start your home search, you’ll know exactly how much buying power you have. To obtain pre-approval, a borrower has to submit basic financial information and provide access to their credit report. Sellers are more likely to accept an offer from a pre-approved buyer because it means there will be fewer issues finalizing the mortgage.
- Be Patient and Flexible
It’s not unusual for buyers to submit numerous offers before they finally have one accepted. When inventory is low, homebuyers often can’t afford to wait for the perfect house to hit the market. Distinguishing between what is fixable and what is not is a key part of house-hunting. If a home meets your needs in terms of location and size, small cosmetic imperfections should not be a deterrent to making an offer. Adjusting your expectations can expand your options but don’t compromise on true essentials. For example, you shouldn’t buy a two-bedroom home if you know you need three bedrooms to comfortably accommodate your entire family.
- Make a Cash Offer
For sellers, an all-cash offer is very appealing and leads to a higher likelihood of your offer being accepted. If you don’t have to use a mortgage lender, there’s no financing contingency, which shows sellers you aren’t likely to pull out of the deal due to financial problems. Cash sales can also happen quicker and lead to a smoother home sale.
- Waive Extra Contingencies
In a seller’s market, many buyers submit an offer without certain contingencies as a way to stand out from competing offers. Waiving contingencies gives the sellers an advantage by taking away protections from the buyer and should only be done with the recommendation and oversight of an experienced real estate agent. Skipping home inspections can be risky for buyers, so it’s important to understand exactly what you are forfeiting as a homebuyer if you decide to waive contingencies.
- Be Willing to Negotiate
Both buying and selling are stressful, so being willing to work with a seller is important. A vital aspect of successfully negotiating a home purchase is understanding what the seller wants and it’s not always the highest offer. For example, if a seller needs extra time to vacate due to another home purchase or construction, you may be able to grant them additional time in exchange for something you want – like having the home repainted. With houses selling quickly, some homebuyers are agreeing to rent the seller the house for 30 days after purchase, so they have time to look for a new house, in exchange for a discounted purchase price.
- Work With An Experienced Agent
Buying a new home is stressful even in the best of times. In a seller’s market, homebuyers need all of the help they can get. An experienced real estate agent can save both time and money by helping you find the right property and negotiating with the seller on your behalf. They can help you determine if your budget is realistic for the area and point you to nearby neighborhoods that might also meet your needs. Agents can also refer you to other professionals like home inspectors, contractors, appraisers and title companies during the home buying process.
- Don’t Rush the Process
Finally, don’t feel pressured to buy a property you don’t feel good about – even in a seller’s market. Buying a house that you really don’t like or that doesn’t fit your needs is never a wise decision. Purchasing a home is the single biggest financial transaction most of us ever make so it’s important to take your time and make the right decision – even in a seller’s market.