Improve Your Chances of Buying A House In A Seller’s Market

When demand for homes exceeds what’s available on the current market, you have a seller’s market. The lower the supply of homes, the more fierce competition for homes. Prospective homebuyers may feel like their chances of purchasing a home are slim. Especially when faced with multiple offers on a dream home, and then again and again…it’s easy to get discouraged. Buying a home in a seller’s market is more challenging than in a buyer’s or neutral market, but it’s still possible to find and close on a home. With some patience and market know-how, increase your chances of finding and buying a home in a seller’s market.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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House hunting takes patience but may not feel that way in a competitive market. Seller’s markets happen when the supply of homes doesn’t match the demand for housing. The more limited supply, the more competitive seller’s market a housing market will have. It puts the negotiating power in the homeowner’s hands.

Sellers can agree on an offer on the same day their home listing goes live. Because of this, potential buyers can’t wait to go to home showings. They must immediately contact their real estate agent to arrange a showing appointment on any home they like. And not for the weekend, but as soon as possible. Make the time! Prioritize seeing homes over other activities whenever possible. If a buyer waits too long, they risk missing out on great homes before seeing them.

Nationally, homes were on the market a median of 29 days during 2023–that hints that it’s much shorter in some places! Imagine a home off the market in under a month. Even in July 2024, when sales activity was slowing nationwide, markets like Seattle, WA, and Lancaster, PA, had homes under contract in a median of six days!

Be Prepared To Buy

The last thing you want is to win a bidding war and then realize you can’t follow through on buying the home. That’s why you want all your ducks in a row before you step into a fast-paced market. That means you’ve pulled your credit report to get your credit score and have done what you can to boost it. You have talked to mortgage lenders about their loan programs and have determined an ideal mortgage payment. You know your home-buying budget, have earnest money and closing costs saved, or have a gift letter ready to go. If you’re a first-time buyer, you’ve educated yourself on the entire home-buying process, including the common contingencies, unexpected expenses, and local median housing prices. Ask you real estate agent for tips on how to buy a house in a seller’s market. Becoming a homeowner huge financial decision, and you want to be sure you’re making the right choice.

Get Mortgage Preapproval

Regardless of the local real estate market conditions, buyers should always be pre-approved for their loan. The approval process can take several days to complete. If a seller is trying for a fast close, then they will prefer a buyer who can bring funds to the table or present a preapproval letter. Getting pre-approved with a lender is an easy process. To get started, the buyer will select a lender to work with. The application will ask for the amount the buyer wants to borrow and their financial credentials. The lender will do background and credit checks to verify the buyer’s fiscal health and ability to afford the borrowed amount.

As they say in real estate, marry the home, not the mortgage rate. Interest rates are subject to fluctuation. If you don’t like yours, you can still shop around or refinance later. 

Don’t Be Too Picky

Everyone has a list of features they’d love their new home to have, but it’s unlikely that a buyer will find a home that fits their desires perfectly. To find a home in a competitive housing market, buyers need to understand they may not find the perfect home. Even if they do, the steep competition may lead to the seller picking a different offer in a bidding war. Instead, focus on the home features that matter the most. Remember: many desired features can be added or changed after purchasing the home.

Don’t Submit Low Offers

Once the buyer has found a home they like, it’s time to submit their offer. Under normal negotiating circumstances, buyers may want to submit an offer under the listing price. However, when there’s a lot of competition, this works against the buyer. In a seller’s market, it’s not uncommon for the seller to receive more than one offer on their home. Instead, buyers should always put their best offer forward first to show the seller that they are serious about purchasing the home. If you can’t go full price, strategize how to make the purchase offer more attractive with the real estate agent. It could be a higher earnest money deposit or waiving some seller concessions. Maybe you’re in a position to present an all-cash offer or can provide extra cash over asking.

How to Buy A House In A Seller’s Market

Know you’re not alone in seller’s markets. Your real estate agent is in your corner to help you navigate the ups and downs when the competition among buyers is high. It is more difficult to buy when the inventory of homes is low, but it definitely isn’t impossible. These tips can help home buyers find and purchase their home in such markets.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

FAQs

What can I do to make myself a more competitive buyer?

Prospective buyers have many levers to pull to boost their chances of winning a bidding war. Financially, you can present an all-cash offer or a purchase agreement over the list price. You can add in an escalation clause, where you will come in a specific amount over other purchase offers. Put down a higher earnest money deposit to show your seriousness. With other loan terms, you can waive inspection contingencies or requests for remedy. If you’re not getting a mortgage loan, you could waive the appraisal contingency or agree to the purchase price regardless of the appraisal findings. You can work with the seller to give a favorable closing date. 

What is a balanced market?

When the supply of houses for sale matches buyer demand, it’s called a balanced market. For most real estate markets, this is considered a six-month supply of inventory. That means on this day, given the number of buyers available, it would take six months to sell all existing homes for sale. Limited inventory creates a seller’s market. Increased inventory and fewer buyers create a buyer’s market.

Updated July 2024