The Truth About Buying in a Seller’s Market
Anyone who has recently perused potential dream homes online can tell you, the options are slim and well… Prices are high. That leads to many questions for buyers, including if now is even the right time to buy a home. In this article, we’ll lay out what effect today’s current housing market truly has on those navigating it as a potential home buyer. Since a stop-and-go home buying journey isn’t ideal, it’s our hope we can help you get a better grasp of whether or not you should pump the brakes or hit the gas on your home buying journey.
We’re in a “seller’s market” but what does that mean?
A seller’s market means the number of prospects looking to buy a home exceeds the number of houses available for sale. In this type of market, inventory is scarce and competition with other buyers is high; seller’s are in the driver’s seat with a lot more leverage than buyers.
Should I just wait until there are more homes available to buy?
With the COVID-19 pandemic somewhat easing, new homes being built and more listings being added prior to foreclosure… Experts predict more homes will be coming to the market throughout 2021. You could wait for more inventory to make its debut, but there is an opportunity cost to doing so.
Mortgage rates and home values are expected to rise. According to Keeping Current Matters, if you wait until next year to buy what is now a $350,000 home, with appreciating values you could end up paying an extra $20,650 for the exact same house next year. With that, if you were theoretically planning to put down 10% of the purchase price, in a year that would equate to an additional $2,065 needed for a down payment. Even further, every month your mortgage payment would be an extra $116. As you can see, the costs are quickly adding up. By waiting, you could be spending a lot more money on the same house you would get into for $350,000 today plus you missed out on $20,650 of equity.
How can a seller’s market affect my home buying experience?
As a buyer in a seller’s market, it may feel like the odds are stacked against you. You can expect multiple offers to compete against, contracts that favor the seller and to see homes sell for higher than listing. Purchasing in a seller’s market also requires buyers to make quick decisions. It’s not uncommon for homes to hit the market as “just listed” and evolve to “pending” with an accepted offer in the same week. There’s no time to “sleep on it”. This environment requires house hunters to be quick on their feet, willing to negotiate and ready to put their best offer forward.
How should I approach buying a home in a seller’s market?
First, you’ll want to find a seasoned real estate professional to guide you through the process. From finding homes, making offers, negotiating and finalizing the contract of your dream home… You’re more likely to come out on top when you work with a real estate agent. But a realtor isn’t the only professional you need.
It is essential that buyers take the time to get their ducks in a row, speak with a lender ahead of time and get pre-approved before they begin the actual home buying process. A Mortgage Consultant can help you better understand exactly how much you can afford. Making an offer with a pre-approval letter in-hand shows the sellers that you are reliable and serious about the transaction. Plus, knowing your max budget will help avoid a bidding war you just can’t compete in. Try to look for homes that are under budget so you have wiggle room to offer more than the listing price or counteroffer & beat out other offers.
Lastly, being buyers need all the help they can get, consider writing a letter to the seller to include with your purchase offer. Price is likely the deciding factor for many, but if it is very close between two offers, your letter’s pull on the heart strings might just seal the deal. Share what you love about the house, how you envision your future in that home and why they should ultimately choose you to be the next owner of their beloved home.
Though this home buying environment is nothing like the carefree episodes on HGTV, that doesn’t mean buyers need to give up on their pursuit of homeownership. With the right professionals by your side, a little patience and some perseverance… You too can be a homeowner, which is well worth the work. Get a leg up against the competition and connect with a mortgage professional today, visit CambriaMortgage.com or call 952-942-0110.
BB&T. It’s a seller’s market: Here’s what that means for you. Retrieved March 05, 2021, from https://www.bbt.com/education-center/articles/its-a-sellers-market-heres-what-that-means-to-you.html
KCM Crew. (2021, February 25). Are there going to be more homes to buy this year? Retrieved March 05, 2021, from https://www.keepingcurrentmatters.com/2021/02/25/are-there-going-to-be-more-homes-to-buy-this-year/
KCM Crew. (2021, February 25). It’s a sellers’ market [infographic]. Retrieved March 05, 2021, from https://www.keepingcurrentmatters.com/2021/02/26/its-a-sellers-market-infographic/
KCM Crew. (2021, March 02). Home prices: What happened in 2020? What will happen this year? Retrieved March 05, 2021, from https://www.keepingcurrentmatters.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/
KCM Crew. (2021, March 02). How smart is it to buy a home today? Retrieved March 05, 2021, from https://www.keepingcurrentmatters.com/2021/03/03/how-smart-is-it-to-buy-a-home-today/
Trulia Blog. (2018, September 18). 6 mistakes Buyers make in a seller’s market – real Estate 101. Retrieved March 05, 2021, from https://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/