Depending on the real estate market where you live, employment opportunities in your area, or the interest rates, you may find yourself in a seller’s market. As you may already know from our blog post “What is a Seller’s Market?”, a seller’s market is when the demand for homes exceeds the current supply, giving the seller the upper hand.
In this type of market, it’s easy to make a mistake and lose a house in a bidding war, or worse, to expect a buyer’s market and need a home in two weeks, only to be stuck without a home for several months as all of the available houses sell within hours of hitting the market.
The following are just a few mistakes to watch out for as a buyer in a seller’s market:
- Ignoring that it is a seller’s market. Although “ignorance is bliss,” what you don’t know can hurt your chances of getting a home. When you’re ready to buy a home, be sure to do some research and figure out whether it’s a buyer’s or seller’s market, and then develop a real estate plan accordingly.
- Being unprepared and unreachable. In a seller’s market, houses go within the blink of an eye. Your real estate agent may know about a home that’s perfect for you and is minutes away from being listed, which starts the timer on making an offer. If they try to contact you and you’re not available, that house could be gone before you even get to make an offer. Always be ready.
- Not getting pre-approved. Pre-qualified means that you’ve gotten an official quote on how much you could obtain in a loan and, therefore, how much you could spend, but pre-approval is the most important thing in a seller’s market. If you’re pre-approved, then a lender is ready to give you the loan now, meaning that you can close the deal on a house more quickly. In a seller’s market, being pre-approved or not could be the difference between winning or losing a bidding war.
- Waiting too long to make an offer. Perhaps worse than being unprepared and unreachable, waiting to make an offer in a seller’s market is a guaranteed loss. Some people even make offers before they’ve seen the home in person. Although that seems bananas, it’s actually a rather solid tactic: just because you’ve made the offer doesn’t mean the purchase is set in stone, you still have the chance to visit the home.
- Not making the best offer you can. Your instinct may be to make a low-ball offer in order to avoid overpaying and to have more wiggle room to negotiate, but in a seller’s market, the sellers can wait (and not long either, given that multiple offers can come in at once) to see an offer with the price they want. If you really want the house, be prepared to make your best offer up front.
- Overpaying. That said, it’s easy to get frustrated in a seller’s market with how many times your offer has been overlooked, or to be paranoid about that happening with your first home. Even so, always stay within your budget. Talk to your real estate agent about ways to ensure that you don’t overspend, and be sure to check out comparable houses so you can familiarize yourself with the typical features a home in your price range.
- Being unprepared for a bidding war or negotiations. Bidding wars are never pleasant, but they’re especially likely to occur during a seller’s market. One way to ensure you don’t go over budget in an unexpected bidding war is to search for houses that are below your max budget. That way, you have wiggle room to spare. Talk with your real estate agent about more ways to prepare for a bidding war, and ways to avoid them, too.
- Choosing an inexperienced real estate agent. Your best ally in a seller’s market is your real estate agent. Having an agent that’s familiar with the ways to navigate both seller’s and buyer’s markets is crucial to your home search. A good real estate agent will not only save you time and stress, but money as well.
- Giving up. Yes, it’s more challenging to find the perfect home in a seller’s market. Yes, you will likely experience a few setbacks. When you’ve heard that your best offer as been rejected, it can be really frustrating, but giving up won’t help. Instead, talk with your real estate agent to figure out what went wrong and how you can improve, then implement a new plan of action and go after the next house. Remember that the real estate market is forever changing, so in the worst-case scenario, you can always wait until it’s a buyer’s market again.
Buying a home doesn’t have to be stressful or headache-inducing. At Howard Hanna Simon Real Estate Services, our goal is to help you make Home Happen Here.® With our one-stop shopping, we offer real estate services, mortgage services, title and escrow services, and insurance services, taking the worry out of moving by guiding you through your entire home buying or selling experience. If you’re moving to a new area, our global and local Howard Hanna Relocation Services can also assist you with the relocation process.
And if you’re thinking of listing your home, there’s no better time than during a seller’s market. Receive a free home estimate and get started on listing your home today! Click here to contact us today.