The real estate market tends to fluctuate, making it difficult to predict whether you will have the upper hand when you are ready to purchase a home.
In a seller’s market, lack of inventory causes stiff competition for homebuyers. In 2017, the typical home was on the market for only three weeks before it was sold, according to the 2017 National Association of REALTORS® Profile of Home Buyers and Sellers. On average, sellers sold their homes for 99% of the asking price. This indicates that the market currently favors sellers.
When buying a home in a seller’s market, it is possible to get a good deal on the perfect home for you. Here are 5 mistakes homebuyers can make in a seller’s market, and how to avoid them.
- Not working with an experienced agent. Your real estate agent is your guide to the world of home buying. You want someone with a good reputation who can show you the best practices for buying a home, especially in a seller’s market. The seller usually pays full commission for the buyer’s real estate agent, so it benefits you to have experience and talent on your side.
- Not knowing your wants and needs. Most prospective homebuyers go to their agent with a list of wants and needs. For example, the number of bedrooms and bathrooms, the size of the house and yard, their price range, etc. Some people may go to their agent with a list of homes they’d like to see, usually found online. Along with showing you any homes you’re already interested in, your agent may also find additional options that you should consider.
- Not having your finances in order. Paying with cash definitely gives you a huge advantage over the competition; however, that is not an option for many prospective homebuyers. When looking to buy a home, you should be preapproved, or at least prequalified, for a home loan. This shows sellers that your offer is legitimized by real finances.
- Not making your best offer first. In a seller’s market, the seller will likely receive multiple offers for their home. Many homebuyers first offer the list price or below, but that could put you at a disadvantage, according to the New York Times. If you found the right home for you, but your best offer on the table first to rise above the competition.
- Not being prepared for a bidding war. In a seller’s market, you might find yourself bidding against other prospective homebuyers for the same home. To avoid going over your budget, consider lowering your initial price range in anticipation of a potential bidding war.
Buying a home in a seller’s market is not the ideal situation for anyone, but it is sometimes unavoidable. With the right tools and preparation, there is a good chance you can still get your dream home. For more tips, this article in U.S. News may be helpful.