Planning to buy a home this year? Then you’ve probably heard that 2018 is a seller’s market, but what exactly does that mean?
As the name implies, a seller’s market favors individuals looking to sell their homes. This usually happens when there are more home buyers in the market than there are homes for sale, and in terms of supply and demand, this is generally good news for home sellers and bad news for house hunters.
If you’re looking for a home in the Albany Capital Region, don’t be discouraged. As real estate agents for Guilderland, Latham, Colonie and beyond, we have some excellent tips to help you survive (and thrive) in a seller’s market.
A Seller’s Market: Tips for Home Buyers
Due to the increased competition in a seller’s market, buyers need to act fast, bid high and follow a few tips from the experts.
Get Pre-Approved
With competition high, sellers are only interested in serious offers, and the number one way to prove you are serious is to get prequalified with a mortgage lender. A pre-approval letter shows the seller that you are prepared and capable of backing up the offer you make. If your pre-approval letter is from an out-of-area lender, get a local prequalification, and ensure your letter matches the sales price and date of your offer.
Make Your Best Offer
While an all-cash offer will certainly get a seller’s attention, that’s not always feasible. Another more realistic option is to offer a larger earnest money deposit – typically 2-3 times more than the normal amount. In addition, we encourage our buyers to offer at least list price. Even then, buyers should be prepared for a potential bidding war and realize they may need to offer more than the amount the seller is asking. A good real estate agent can help you determine your best offer.
Don’t Ask for Favors
A seller’s market is not the time to ask the seller for help with closing costs or to request that they replace the front door. Likewise, buyers should avoid asking sellers to throw in personal property or extras, such as their appliances or patio furniture. While this is common practice when housing inventory is high, these requests will weaken your offer in a competitive seller’s market.
Be Flexible
Waiving contingencies and seller concessions go a long way in getting the attention of a seller sifting through numerous offers. One suggestion is to be flexible with your move-in date, allowing the seller more time to move out. Another consideration, although not recommended, is to waive the inspection. Most importantly, your offer should not be contingent on the sale of another property or financial factors.
Don’t Get in Over Your Head
Often, buyers get so caught up in a seller’s market that they forget their financial goals. Impatience, even a competitive nature, can lead buyers to overextend themselves before they realize what has happened. Keep in mind that your mortgage payment should be no more than 25% of your monthly net income on a 15-year fixed rate mortgage, and watch out for bidding wars that have the potential to put you over budget.
Work with an Experienced Agent
The number one mistake home buyers make in a seller’s market is working with an inexperienced real estate agent or someone who is not familiar with the local market. Not only do you need someone who can help you navigate negotiations and be honest with you, but you need a seasoned expert who can act fast and think outside-the-box.
For instance, one of our Guilderland real estate agents has made it common practice to contact the listing agent for tips. This helps us prepare the offer the way the listing agent likes it the first time, avoiding the need for counteroffers, and often ensuring the listing agent recommends our buyer’s offer over another.
Contact CM Fox Real Estate
If you’re house hunting in Guilderland, Latham, Colonie or anywhere in the Albany area, our real estate agents will help you find the right homes, at the right price, as soon as they hit the market, and we will work with you to write a competitive offer. Contact us today at (518) 861-7030.