5 Realities Successful Home Buyers Have Learned to Accept in Today’s Market
The market is hot right now. Really hot.
The inventory of homes is very tight, homes are selling in days and weeks instead of months, multiple offers are common, and prices are on the rise.
Home sellers for well-priced homes are very much in the driver’s seat.
After seeing many prospective clients frustrated by the current real estate market we thought we would offer a little tough love. We work with lots of clients in all price ranges. There are definitely differences between the way the successful buyers are approaching this market and the approach of the buyers who are having a hard time.
Here are a five things each of our clients who have successfully purchased a home in this market have been willing to accept.
1) You Must Get Pre-Approved for a Loan or Document Your Cash
You have to be pre-approved for your loan or have your cash funds fully documented before you start looking. You should have all your paperwork in to your lender and have a solid pre-approval letter, or you should have bank statements available showing you have the liquid funds available to close before starting your search.
- Most sellers will not consider an offer without this documentation.
- Many higher end properties and homes with sellers who have difficulty showing their property now require that this documentation be provided before homes can even be shown.
2) Your Existing Home Should Be Listed or Ready to List
If your existing property needs to be sold for you to move to your next home, it needs to either be listed currently with a qualified agent at a price near market, or you need to have all the paperwork in order and all the pre-listing tasks completed, so you can list it immediately upon finding a home you are interested in.
- It is tempting to wait to list your property or get in a discussion with a listing agent only after finding exactly what you want in a replacement property. Unfortunately, this does not work, because the home you are likely to want is unlikely to be available long enough for you to get your property listed and move forward.
- Sellers may accept an offer contingent upon a property being sold that is currently listed. They will almost never accept an offer contingent upon selling a home that is not already listed.
- If you must make your offer contingent upon selling your current home, be prepared to make it stronger in other ways, such as offering what the seller is asking.
- In the best case scenario you will find a way to purchase your next home using funds not tied up in your current home or by working something out with your lender that will allow you to make your next purchase without already having your other home sold.
- Not making an offer contingent upon selling another property will increase your chances dramatically in getting an offer accepted.
3) You Should be Prepared to Act Quickly and be Decisive
You have to be prepared to be decisive. Each time you go out to view homes, you should be prepared to make an offer, if you like what you see. Many of the best homes are selling within days of being listed. If you have to sleep on it for a few days or longer, you are likely to miss out on some great homes.
- If there are family members, friends or anyone else you feel will need to see a property before you make an offer, they should be present while you tour all the properties. If you only bring them along once you find the right place, it will be hard for them to compare the property relatively to the homes you passed on and if it will take a few days before they can make it out to see the home, you may lose the property to another buyer.
- Keep in mind that you do have inspection periods to check the home after an offer is accepted. If you uncover a major issue during those inspections you have the right to back out and keep your deposit in most cases.
4) You Must Have a Compelling Need or Desire to Buy a Home
You must have a pressing need or desire to buy a home. If you don’t really want it or need it, it is not likely to work, because honestly it is work to buy a home.
- It is important that your partner or spouse be equally motivated, if you are buying the home together. If one partner is less motivated, it can often lead to feet dragging or intentional or unintentional sabotaging of the process.
- Make sure you and your partner have sat down to truly discuss your list of “must haves” and “would like to haves” and be prepared to compromise.
- Be sure to communicate with your agent what features you have agreed are needs.
5) You Must Be Willing to Accept the Market for What it Is, Not What You Would Like it To Be
You must accept that the market, prices, the homes available, the speed at which you must act and the relative lack of negotiation power you will have in a sellers’ market. The market is what is. If you accept that, you can find a great home, make an offer that will be competitive with other buyers, and are likely to entice a seller to accept your offer.
- If you are waiting for a needle in a haystack home, it may never come.
- If you feel like everything is overpriced and are waiting for sellers to see it the same way, you may be waiting a long time.
- If you want to offer anything less than 95% of asking on a home, you are unlikely to get an accepted offer. Homes are selling currently at an average of 98-99% of what they are asking. Many of the most aggressively priced homes are selling for more than they are asking. If a home has been listed for a while, there may be room to negotiate, but it is not likely to be more than a few percent.
- Sellers want to close sooner rather than later, want to repair as little as possible and want to net as much as possible on the sale. If you ask to extend a close date, ask for repairs and/or credits, or otherwise add language to your offer that will make it riskier for the seller, you are lowering your chances of getting your offer accepted.
Not to Worry, We Have Helped Many Clients Find a Home and We can Help You Too
Every client we have helped to purchase a home recently has accepted each of these steps and in talking with other agents in the industry, they have reported the same.
The good news is that while it may require a little work to make it happen, we are here to help you with the process too.
If you don’t have a great lender, we can put you in touch with one.
If you have a home to sell locally, we can help with that too. If you have a home to sell out of the area, we have a great network of agents around the state and country we can refer you to.
We can also make sure you are kept very up to date on what is available for sale, get you in right away to see properties and help you draft offers that will get accepted.
With our help and your willingness to do your homework upfront, be decisive, compromise with yourself and your partner, and your willingness to accept the market conditions for what they are, you can be happily moving into your next home soon.