With the real estate market facing increasing final sales prices and low inventory levels in some of the hottest areas, buyers are finding themselves in a seller's market.
When these market conditions are present, sellers may have the upperhand during negotiations because they can selectively choose which buyers to negotiate with to get the best possible deal. As a buyer, you have to keep some of the seller's tactics in mind to ensure you don't get thrown off from your own plan of action.
Unfortunately, you might feel pressured to secure an agreement much earlier than you would like. With high stress levels comes an increased risk that you might make a mistake that may favor the seller too much. In other instances, your initial offer may not be good enough, and if this happens, you'll likely find yourself searching for another home to buy.
Don't let this pressure get to you and. To help you even more, there are some mistakes you should avoid.
Working with a new real estate agent
Every new employee requires some time to acclimate to their job and how everything works. This is no different for real estate agents, but in a seller's market, you want to partner with a broker who is seasoned and understands market conditions inside and out.
Trulia stated that experienced brokers are more likely to help you finalize a deal on a home than if your were to partner with an agent who has been with his or her firm for only a few months.
If you want to present yourself as a serious buyer, come to the table with preapproval or a prequalification for a mortgage. Prequalification indicates to the seller that you have your finances in order and have taken the time to sit down with a mortgage lender. By getting prequalified, sellers will see you have the income needed to afford monthly mortgage payments and have a good handle on your existing debt.
But if you truly want to make an impression, it's in your best interest to seek a preapproval. The preapproval process involves you actively seeking out a reputable lender and starting the process of obtaining a mortgage by showing you have strong credit, reliable income and more. Sellers like to interact with serious buyers, and preapproval shows you're someone that is committed to making a purchase.
Not understanding market conditions
It's a seller's market. By ignoring this, you risk being passed over by other buyers who understand what moves to make when housing inventory is low. In a seller's market, you have to prepare yourself to enter back-and-forth negotiations with the seller and other parties interest in the same property.
In a seller's market, waiting too long to submit an offer can be detrimental to your homebuying prospects. But you have to strike the right balance because you don't want to make an offer too soon, only to find there are some conditions that don't meet your expectations.
But waiting too long endangers your dream house of being sold before you know it. To ensure you don't fall behind, obtain a mortgage preapproval and be ready to make an offer.
And when you do make an offer, you have to make sure it's your best. Lowballing the sellers may cause them to completely ignore your offer. As such, you need to make a strong initial offer. Doing so will also show the seller you're serious about purchasing the house, and they're more likely to work with you and your agent to come to an agreement. One way to get a seller to take a harder look at your offer is to get to know them a bit more, Bankrate recommended.
Part of the agreement also includes the number of home inspections and who will pay for repairs if needed. Sometimes the home inspection turns into a big point of contention between the two parties.
Purchasing a home in a seller's market may require you to rework your strategy when it comes to purchasing a home. You likely don't have as much time because inventory is low and the competition is strong.
You can help yourself find your dream home by partnering with experienced real estate brokers, seeking a preapproval and making a strong initial offer.