five tips for buyers in a tight market

Attempting to purchase a house in a market where inventory is low and prices are rising can make the already complex process of buying a home even more overwhelming. Here are five suggestions to help buyers get through the buying process in a tight inventory market:

1. Determine and stick to a budget. Before beginning the house hunting process, prospective homebuyers should receive pre-approval from one or more lenders to verify the amount of money they are qualified to borrow. Then, after taking into account additional costs of ownership such as taxes, utilities and insurance, buyers should determine a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices, so buyers must be prepared to walk away if the asking price surpasses their budget. Let us know if you need help obtaining a lender pre-approval letter.

2. Identify desired neighborhoods and home wants versus needs. When inventory is tight, buyers may need to compromise on what they believe they want from a home. Certain wants, such as stainless appliances or hardwood floors, can be added later. However, if a buyer wants to be in a specific school district or have a decent sized backyard, those cannot be addressed later and must be taken into account during the house hunting process.

3. Be ready to make a decision quickly. In a seller’s market, homes rarely stay on the market long, so when a house that is in their budget and checks off all of their needs comes along, buyers should be ready to submit an offer quickly, or they may risk missing out on the home altogether.

4. Bid competitively and limit contingencies. In a seller’s market, buyers need to put forward their highest offer from the very beginning, or they are likely to lose out on the home. Also remember that in multiple bidding situations it is not always the highest offer that is most attractive to the seller but the one with the fewest contingencies. Removing restrictions related to the sale of a current home and being flexible with things, like the move-in date, can make a bid stand out to a seller.

5. Write a letter to the seller(s) about why you want to buy their house. Present it to the sellers with your purchase offer. A well-written letter can make the difference between winning your bid and missing out. Obviously, the most important thing to do to win a bid is to offer the most money or the quickest, least painful closing timeline. But in a competitive market where bids are tight, a good letter can help.

A house is a very personal, intimate part of a family. Selling is not easy and not fun. It's not just a financial decision. A home has memories and emotions tied into it. When selling, you want to know that you're passing it along to the right people who will care for it as much as you did. A letter to the homeowners may sound a little foolish to do, but it can definitely differentiate you and give you an advantage.


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