This year has seen a seller’s market with a big housing crunch. The pinch began last year when we saw a rise in prices with a lack of inventory. Currently, the crunch is getting even tighter with the rise in mortgage rates. Here are five tips from the pros on how to compete in this hot housing market.
1. Demonstrate Solid Financing
The higher the probability of closing the better the offer. All-cash is the best scenario but if this is not possible. The National Association of Realtors reported that around 1 in 4 home purchases are all-cash.
So if you are taking the financing route, you will want to obtain a preapproval letter. A preapproval letter puts the seller at ease knowing that the financing will come through. Both agents and sellers know that you are a serious buyer.
Another thing to consider is the reputation of the lender you are using. Realtors will know if a lender has a bad or good reputation in the industry. If you are unsure, get a recommendation from your realtor.
2. Put Down a Sizeable Deposit
Putting down a large deposit is a good way to get the seller’s attention. This shows the seller that you are very serious. The money you put down is called earnest money. Earnest money is a deposit held in escrow by a title company or the seller’s broker or lawyer. If the purchase goes through, it is applied to the down payment and closing costs—if the sale falls through, the buyer may lose some or all of that deposit.
3. Ask for Few (or No) Contingencies
Contingencies are clauses that are added to a contract that allows both parties to back out of the agreement if the contingencies are met. Some of the most common contingencies are financing, inspection and appraisal. Sellers might not like having a contingency because the sale could fall through.
4. Offer a Flexible Closing Date and/or Leaseback Option
Making it more convenient for the seller is very appealing. If a buyer shows flexibility, a seller is more apt to choose their offer. Flexible terms can make all the difference. A perfect example is a seller that is making a big move and needs a longer closing timeline. A leaseback option is something that can also be used. This is when the seller rents the house back for a short term from the buyer.
5. Work With a Skilled Buyer’ Agent
In this seller’s market, a buyer has to be on their A-game. Working with a skilled and trustworthy realtor is a must. A realtor will not only get a buyer the best deal but explain the process as well.
A realtor knows how to write an attractive offer that will benefit both the seller and the buyer. They will take you from the start to finish.These tips can help you with the competitive market but a realtor is the key to purchasing a home successfully. Choose a sales agent that is in your target neighborhood.