If you are a buyer trying to buy a home in a seller’s market, it can feel like an uphill battle. There could be numerous bidders that you have to work against to win the bid on your home. Before you attempt to win the bid, learn the top tips to help you come out the winning bidder.
You Need a Pre-Approval
Now more than ever you need a pre-approval before you even start looking at homes. Sellers want to know that they are dealing with serious buyers. Without a pre-approval, the seller has no idea if you can secure financing. This makes you look less serious about buying the home.
In fact, many sellers won’t even show their home to buyers that don’t have a pre-approval. If they do show it to you, they probably won’t accept any bids you make on the home. They are more likely to accept bids from buyers with a pre-approval, even if the bid is lower than what you offered.
View Homes Fast
In a seller’s market, you don’t have time to sit and think about viewing a home. Once it hits the market, you should be one of the first potential buyers to see it. This way you can make a fast decision whether you like the home or not.
While you don’t have to make a bid the first time you see the home, you’ll want to make a decision rather quickly. If the home interested you, set up another showing. This time look at the things that you are unsure about to help make your decision. If you decide you like the home, start creating your offer because you never know when someone might swoop in and make an offer on the spot. If your offer is in, the seller has multiple bids to consider, which may even give you more time to think about your decision.
You Should Offer Earnest Money
Because sellers want to know you are serious about buying their home, they would like to see an earnest money deposit. This is like an insurance policy for sellers. You offer a certain amount of money to put down in ‘good faith.’ This money sits in an escrow account, usually with the title company. It remains there until the closing.
If you were to back out of the contract for a reason not covered in the contract, the seller would get to keep the earnest money. The only reasons you could back out of the contract would be any contingencies you put on it. For example, if you have a house to sell, you might make the purchase contract contingent on you selling your home. The contingencies only give you until a certain date, though. After that date, if you back out, the seller keeps the earnest money.
In a seller’s market, the more earnest money you offer, the more weight the seller may give your bid.
Offer the Seller Favors
You want to make your bid as attractive as possible in a seller’s market. In other words, don’t ask the seller for favors. Instead, you offer the favors. For example, maybe the seller offered to leave the appliances for you, but then you overhear that they need appliances for their new home. If you offer to let them take the appliances despite what the listing says, it may give your offer more weight.
Sometimes sellers need to hang back in the home even after you purchase it, even if it’s just a few days. Offering that buffer can mean the world to the seller. Sometimes it means more than the money you pay for the home. This could give you the leg up on the competition.
Get to the Know the Seller
Finally, you should get to know the seller. Sometimes a personal relationship speaks louder than money. The seller is selling you a piece of their history. They may feel better selling it to someone that is just like them or someone that they know will care for the home.
Maybe there is some aspect of the home that really spoke to you. It could be a specific feature in the layout or something cosmetic, such as the way a room is painted or decorated. Whatever the case may be, get to know the seller personally. Connecting with the seller can give you the leg up on other bidders who are just a number to them.
Bidding on a home in a seller’s market is hard work. Make sure you have the help of a real estate agent to ensure that the bidding process goes as smoothly as possible. Prepare yourself for a counter offer as well. If there is a bidding war, sellers have the upper hand and may try to get full asking price for the home. Knowing your maximum desired price ahead of time can help you keep your head in the game.