A Buyer's Guide to WIN in a Seller's Market
Buying a Home: 101
Before we get to our guide, I want to tell you a story and give you a bit of background.
We were in the midst of one of the hottest markets in our history. While working with one particular buyer we were asked, "why do you keep pushing me to get pre-qualified? I just want to go look at this house!" So off we go, and the house was amazing. This buyer said it was the home of their dreams!! She decided to write an offer... BUT, that's right, we couldn't because they had not taken the time to be fully prepared. It ended up taking an extra 2 days before she was able to write an offer and in that time, their dream house was bought by another family. She was devastated...
We start with that story, because unfortunately this is too often a common occurrence. We write this article so that hopefully YOU will never experience the devastation of NOT being able to buy your dream home.
Just in case you are not familiar with what a "Seller's Market" is, here is some background. By definition, a Seller's Market is a market place in which the seller's product holds several key ingredients. The 2 main ingredients are:
- A scarcity of available product or what we call a "lack of inventory. This occurs when there are more buyers than there are homes available.
- Low interest rates: when credit and funds are less expensive to obtain buyers are more motivated to take out loans etc.
This is the perfect example of the principle of "Supply and Demand". The low interest rates make money very affordable to borrow. Subsequently, more buyers enter the marketplace. This scenario makes purchasing a home similar to that of an auction to buy a rare or famous painting. The lack of supply brings out the competitive nature of buyers who attempt to outbid one another and drive up the price until someone wins. With so few homes on the market, this bidding process is fairly common and results after time, driving up the value of the homes in the whole area.
How to WIN as a Home Buyer:
We started this article with a true story about a buyer that was not able to buy their dream home due to a lack of preparedness. So tip #1 is...
- Be Prepared! (Do your homework)
- #1 Hire the RIGHT Agent! Having a seasoned veteran agent that is looking out for your best interests is critical. (we recommend you hire us.)
- Get Pre-Qualified for a loan! In order to write a successful offer on a house, we must prove to the sellers that you are able to purchase it. A letter from the Lender stating that they have reviewed your credit, income & other information and certifying that you are qualified is a BIG step.
- Be On Call!
- If the home you're looking for is hard to find, you need to be able to make time whenever a new one pops up for sale to go immediately to see it.
- When inventory is low, days on the market for homes go WAY down. Homes do not sit on the market long so you need to try to be the first to see it, first to offer.
- Limit the Contingencies!
- This has to do with all of the things you might request from the seller in writing (in the offer). Things like Closing Costs concessions, Seller-paid items (home warranty etc.), repairs, or even personal items like refrigerators.
- Leave OFF anything that is not absolutely critical in buying the home! The offer that is the most money and the fewer extras from the seller usually gets chosen.
- Cast a Wider Net!
- Location, Location, Location... We understand that WHERE you live is super important, but we do recommend that you be a bit more flexible in a seller's market. Identify your absolute Needs/Must-haves, and be willing to explore a wider area. This will increase your chances of finding that home dramatically.
As always, the KF Home Sales Team is here for you. We desperately want to be your Real Estate Advisers for LIFE. Please don't hesitate to call, email, text, or even send a smoke signal! We are here for you
Adam Kitt & Noel Fielding
The KF Home Sales Team
Quality First Real Estate Group
Adam's Cell: 559.284.5488 - Noel's Cell: 559.358.7205