Tactics to buying a home for the best price in a hot seller’s market
I am sure I can speak for many major metro areas throughout the United States, but I can definitely speak for the market where I work as a real estate agent in Portland, OR, that our housing market is still a hot seller’s market as of 2018. It’s not 2016 hot but locally there is still a big demand for housing with little supplies in the Portland area where the job market and the economic outlook is very strong. If you are a seller, selling is easier nowadays so long as you are not over pricing your home too much. Yes, there are still homes that stay on the market for over 60 days in this hot market because the home is over-priced and marketed inadequately. But for the most part, if you price your home on part with the market value given its conditions, it will sell quickly.
For buyers, buying a home in a seller’s market is quite a challenge. You hear about bidding wars and multiple offers and it’s still happening to a certain degree in 2018 although not as much as it did two years ago. So how can a buyer still get a good deal on a home in a hot seller’s market? It seems to be an impossible task but it’s still possible if you work with a smart agent who is always around the clock. Most importantly, you have to ready as a buyer. Time is luxury in real estate market and by the time you spend enough time soul searching whether this is the right house, it will likely be sold already. Follow these tips below. These are some of the tactics I developed over time working with home buyers in this hot Portland market.
Be ready and decisive as a buyer
I understand buying a home for you and your family is a big deal but time is money. Get pre-approved for a mortgage before you look at homes you might fall in love with. You may want to put an offer in on the home right away but you need that pre-approval letter with your offer, which takes a couple of days after your lender pulls your credit and reviews your debt to income ratio. Looking at homes is more fun than dealing with the reality and numbers, but you have to be ready first to take action if you like the home.
See what kind of homes hit the market in the area you like within your budget. You can look at it on Zillow or Redfin but if you have a realtor, always check the original MLS data. Your agent should also let you know whether a particular house is a good deal or not but without seeing the house first, it’s hard to know if that’s true due to hidden conditions that don’t show on listing photos. But after you study what kind of inventories have been available, you will get a good idea of when something pops up on the market if that is a good deal or not. Remember, there are many other buyers thinking the same thing when they see that house that just hit the market and is priced right.
Snatch up the deal the same day or ASAP
When a seller puts a home on the market for sale, the seller may have a good idea if it’s a good deal or somewhat over-priced especially if the seller is working with a realtor who is in tune with the local market. If it’s a home that is priced to sell, the seller or the agent cannot be 100% sure up front whether there will be multiple offers in a few days or by the end of the coming weekend. So until they know that there will be multiple offers, the seller will review an offer as it comes in. If a home is priced well, the best way to snatch up the deal is to put in your offer on the same day it hit the market for the full listing price. You will beat the crowd and take the home for the asking. If you offer below asking, the deal will drag on at least two more days going back and forth and in the mean time, the seller could likely receive another offer that is better. In that case, you will lose the opportunity and you will end up spending more than the listing price to win that home. Your effort to save money could come back and bite you by having to pay over asking to compete with the other offer. If not, back to the drawing board waiting for another deal to pop up but unless you’re ready to offer its asking, you may not get out of the vicious circle of losing. Of course, I’m not suggesting you as a buyer should always put an offer in for the asking price just because the market favors sellers. In cases like this, have your realtor check the value of the home with comparables so that you know that buying the home for its asking price is not overpaying for the home.
Negotiate on an over-priced home
As I mentioned earlier, some homes still stay on the market for over 30 or 60 days in a hot seller’s market. That’s usually because the sellers over priced their home. It could also be that it’s not a popular type of home, or is not move-in ready, thus reducing the pool of regular family buyers in the area. When a home like this stays on the market for long enough, the seller may or may not reduce price. Some sellers are reluctant to reduce price despite the home not selling because he or she doesn’t want to send out a message that could invite low offers. However, the fact the home has been on the market for that long in this market alone sends out the same message. In this case, always have your realtor perform a market analysis and see what the home value should be. Also, it helps if your realtor has some construction knowledge to advise you on how much certain repair and upgrades can cost. After you have that information, you can set your bottom line for negotiation. Gather as much facts as possible in order to aid your negotiation so you can get the home for the price you want.
Bidding war strategies
If you are in a multiple offer situation, sometimes winning is losing if you get carried away. Set your maximum value carefully and work with an agent who can use every leverage to help your case. At the end it’s all about the high price but sometimes other things can help. Read more on how to win a bidding war on a home.