There are a few data points you can look at to gauge the temperature of the real estate market.
How long are listings staying on the market? How many listings are there on the market in total? You can find these and more market trends on websites like Redfin and realtor.com. When houses sit on the market for 6 months and longer, or total listings are higher than the year prior, the market is more favorable to buyers. The inverse favors sellers. Let’s talk about the current market conditions.
Houses are selling in record times, and the number of houses on the market has been low for some time now. How does someone buy a home in a market like this?
We have more or less been in a seller’s market since the start of the COVID-19 pandemic. A seller’s market is one where there are more buyers than houses available for sale. As Stephen Casil has noted in his Casil Reports, the real estate market has had low inventory for some time now.
While sellers have an upper hand when it comes to negotiation, that doesn’t mean buyers can’t find what they are looking for in this environment.
Buyers able to buy a home right now get to take advantage of low mortgage interest rates. In a seller’s market, buyers that are better prepared and quicker to act than their competition (other buyers) are the ones that stand out. Here are three tips that will help you navigate a seller’s market and get the house you’ve been wanting.
1) Get a pre-approval
A pre-approval is when a bank or lender has determined that they are willing to give you a mortgage up to a specific dollar amount. Having financing already secured will set you apart from other buyers in a competitive market. It shows seriousness in your search for a new home. The most important reason to get pre-approved is that it confirms to the seller that you have the financing to complete the transaction. That is what a seller is looking for most. Imagine for a moment that you are the seller, not the buyer. You have gotten into the late stages of selling your home with a buyer, only to find out that their financing has fallen through! Being pre-approved gives the seller peace of mind that this won’t happen.
Read more about how to get a pre-approval here.
2) Work with a real estate agent
An experienced real estate agent will make navigating a seller’s market much easier. Agents know when new houses hit the market, sometimes even before listings are official.
When it comes to negotiation, an experienced real estate agent will ensure that you get the best deal possible. In a seller’s market, it’s especially important to have a professional conduct your search and negotiate on your behalf.
If you don’t have a real estate agent, here’s an article that can give you some insight on how to search and find a good one.
3) Look for homes under your spending limit
Looking for homes under your spending limit gives you the ability to bid over the asking price. In a seller’s market, it is likely you aren’t the only one interested in a property. This can result in a bidding war. By focusing on homes that you can bid on above the asking price if necessary, you’ll be rewarding your future self. Many people make the mistake of going over their budget. This can result in years of constrained finances and unneeded stress. Save yourself from that by looking at homes that have a cushion between its’ listed price and your spending limit.
Navigating a competitive housing market can be tough. Tell us your goals below and one of Lyons’ trusted Mortgage Professionals will point you in the right direction.