Buying a house is a significant life milestone, but it can feel like an impossible dream in today’s competitive housing market. Low inventory and high demand often means multiple offers, and bidding wars are frustratingly common.
Getting into your very own home is not hopeless, though. With the right strategies, a bit of determination, and help from the right loan officer and real estate agent, you can navigate this market and still snag the home of your dreams.
In this blog post, we will detail those strategies to help give you an advantage over the competition and increase the chances of the seller accepting your offer.
Get Pre-Approved to Stand Out from the Pack
One of the most crucial steps when buying a house in a competitive market is getting pre-approved for a mortgage. It shows sellers that you’re serious and financially capable of making a purchase, giving you an edge over other potential buyers.
Getting pre-approved is different than getting pre-qualified. In the pre-approval process, your lender verifies your financial info and can assure sellers that you are able to close on the deal, unlike in the pre-qualification process. Pre-approval requires your lender to verify both your income and credit, which also helps you determine what you can comfortably afford.
A pre-approval letter gives your offer an added level of legitimacy because it means that your lender has already verified you’re able to move forward with the purchase. And while pre-approval may take a little longer in the beginning of your buying process, it will end up saving you more time in the long run by not having to go through multiple offers on different houses.
The Power of a Strong Offer
In a competitive market, crafting an offer that will catch the seller’s eye goes beyond just the price tag. A strong offer strategically balances your desired purchase price with terms that entice the seller and make the deal appealing to them too.
Adding an escalation clause and limiting contingencies is a great way to start beefing up your offer.
Adding an escalation clause shows your willingness to increase your offer if there are competing bids up to your pre-determined cap, demonstrating your commitment to winning the house.
Limiting contingencies, like inspections and appraisals, makes your offer less risky for the seller. Still, exercise caution, as waiving important contingencies can backfire if there are hidden problems. You should always talk with your real estate agent before you decide to waive any contingencies. They are trained to detect any red flags that may prevent you from being on the hook for expensive repairs later on.
A larger-than-usual earnest money deposit also signals your seriousness and good faith in completing the purchase.
Finally, accommodating the seller’s ideal closing timeline can sweeten the deal, especially if they are closing on their own home purchase. If you are in no rush to move in, the seller may be interested in a rent-back agreement. After closing, the seller would stay in the property for an agreed amount of time. For some sellers, this may be ideal if they would be unable to move into their next property after closing.
Work with a Knowledgeable Real Estate Agent
A knowledgeable real estate agent is your greatest asset when navigating a competitive housing market. They possess invaluable market insights, negotiation skills, and connections that can mean the difference between securing your dream home and losing out. A seasoned agent in your local area will know how to position your offer for maximum appeal in the current environment.
Beyond just crafting offers, a good real estate agent can alert you to new properties the moment they hit the market, and sometimes even before they’re publicly listed! They understand the nuances of the local market, helping you assess fair prices and avoid overbidding out of desperation.
Real estate agents are an invaluable part of the homebuying process. Their expertise and support will streamline your home buying process and significantly improve your chances of success.
Be Patient, and Don’t Panic
Buying a house in a competitive market can feel like an emotional rollercoaster. It is easy to get discouraged when one of your offers is rejected, or you are outbid again. The key is to stay patient and avoid panic-buying. Rushing into a purchase out of desperation can lead to overpaying or settling for a home that does not truly meet your needs.
Remember, buying a home is a significant investment. It’s better to wait for the right property to come along than to end up with buyer’s remorse. Use the time between offers to reevaluate your priorities, refine your search criteria, and communicate closely with your real estate agent. The right house for you is out there, and with perseverance and a level head, you’ll find it.
We believe that the best part about buying a house is that you do not have to do it alone. The current market may offer its challenges to prospective homebuyers, but our loan officers are here to guide you through every step of the way.
Figuring out the best course of action depends on your individual circumstances and financial goals. Our team can review your personal financial situation to help you develop a strategy to win in this market. Get started with a free consultation today!
This post contains links to other websites that are not hosted nor controlled by FHM. FHM is not responsible for their content, or the content of any information linked to these websites. Links to other websites are provided as a convenience to our visitors and do not imply any endorsement by FHM of information contained in these websites or the organizations that support them.
The included content is intended for informational purposes only and should not be relied upon as professional advice. Additional terms and conditions apply. Not all applicants will qualify. Consult with a finance professional for tax advice or a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 04/25/2024.