In a sellers’ market - meaning that housing inventory is lower than normal - sellers are in a position to receive multiple offers and can also expect listing times to shorten. Sellers have the luxury of choosing the offer that best meets their needs.
If you’re the buyer in this scenario, there are some things you should know about the buying process, so you can be in a good position to meet the seller’s needs.
- Get pre-approved with your lender before you start shopping for homes. The seller knows you are serious, and a full pre-approval eliminates the potential risk to the seller that you may not qualify to purchase the home if they accept your offer. With a pre-approval, your closing timeframe will also move more quickly and efficiently once your offer is accepted, as the seller knows you are already halfway done with the loan process. The potential for surprises with borrower qualifications is greatly reduced, which gives the seller more certainty.
- A high tide raises all boats when it comes to a seller’s market. This means you may sell your current home at a higher market value, but you can also expect to buy a home at a higher market value. Accept this as a normal real estate cycle, and that the opposite is true in a buyer’s market. The market equalizes the playing field in each cycle, and that’s to be expected. Many people expect to sell high and buy low, and are quickly disappointed.
- If you are a first-time home buyer or do not have a home to sell, then you need to make a strong offer for the seller. In addition to getting a pre-approval, consider putting inspection timeframes on the fast track, and shortening the completion times if possible. The knowledge that you are quickly going to complete your due diligence can give a seller more peace of mind.
- Work with a community lender who can sit with you face to face and describe exactly what to expect, especially if you have never done this before. A mortgage lender who lives and works in the market where you’re buying has a natural reason to make sure you have a great home-buying experience, and they serve the real estate community they live in. A negative reputation will impact their business to much higher degree than a mortgage lender who is not personally tied to the community for reputational risk. Sellers who see a mortgage lender based within their market may be comforted by the fact that everyone is vested – all parties involved want everything to go smoothly, because they know and live in the market they serve.