How to Win in a Competitive Housing Market
In the most competitive housing market on record, you’ll need a survival kit to secure the home of your dreams!
Whether you believe in climate change or not, there’s no denying that the housing market has been heating up for a while now. According to Danielle Hale, chief economist for Realtor.com, this year’s spring market is shaping up to be the most competitive housing market we’ve ever seen. But why? Simply put, there are a lot of buyers, and not a lot of sellers.
A variety of factors have pitched in to create a harsh environment for anyone looking to buy a home these days, and from the looks of things, it’ll only get worse with time. Years of underbuilding and labor shortages have led to record low inventory while Millennials have begun to reach prime home buying ages. It’s a collision course that has been set for years, and the catch-up effort is too little too late. It’s rough out there. But a challenge never scared you off. In fact, you welcome it. You’re a survivor! You’re going to get the house you want for a great price, and here’s how.
1. The three ps
Persistence. Patience. Preparation. These virtues are essential to everyday life, and you’ll need all three in order to get a home you really like in this competitive housing market. Buying a home in today’s market isn’t easy by any means, but it is easy to get down on yourself if things aren’t going your way. That’s why it’s important not to give up, to stay patient, and to always be prepared and ready to act if an opportunity presents itself. The right attitude goes a long way when it comes to house hunting, and focusing on the Three Ps will make for a smoother, less-stressful process.
Persistence. Patience. Preparation. These virtues are essential to everyday life, and you’ll need all three in order to get a home you really like in this competitive housing market.
2. Cash buyer? No problem
So you’ve found the house you really want and you’re ready to make your offer, but there’s a problem. You’re going up against a cash buyer. For those of you who don’t know, a cash buyer is simply that: a home buyer who plans on paying for the home with cash. OK, well what’s the difference? Cash buyers are seen as more of a sure thing, and paying with cash can really expedite the closing process. However, that doesn’t mean you can’t win! Don’t panic! You can beat them if you follow a few simple steps.
Move quickly: Part of the appeal of selling to a cash buyer is how much it speeds up the process. If you can expedite your part of the process to compete with the cash buyer, you’ll give yourself a decent shot at beating them. Ask your lender if you can get a head start on your mortgage by being proactive and sending any questionnaires that need to be filled out ahead of time.
Ask your lender how quickly they can send an appraiser to the property and how long the loan will take to turn around. If you can get your appraiser in and out within 48 hours, you’ll be in good shape going forward.
Finally, you’ll want to get your inspector in and out as quickly as possible after your offer is accepted. It may take a few hundred dollars extra, but it’s worth it to speed up what can be the lengthiest part of the process and show the seller that you’re serious about buying their house.
Overpay: Yeah, I know. It doesn’t sound great, but cash buyers tend to expect a discount because they’re offering cash and it’s a sure thing. You can counter this by offering more money, even if you think it may be more than what the home is worth. A few thousand dollars may not do the trick, but if you can offer 5% more than the cash buyer, you may be able to swing the momentum in your favor.
Note: These tips will only work if you’re prepared. You need to have everything in order if you’re going to beat a cash buyer to the punch. Organization is a must, and a little extra dough saved up won’t hurt. I told you, those Ps are important.
3. get your mind right
It’s time to get serious. You’re buying a house, not picking what you want for lunch. You’re going to have to put the work in. Sure, a good real estate agent will help a ton, but ultimately, you’re the one who’s buying. It’ll take a lot of effort and some sacrifice on your part too, so you’ll have to be mentally prepared. There will be highs and there will be lows. The average home search takes up to TWO YEARS from start to finish, so the Three Ps are important here. This isn’t the time to play around. Go in with your best offer and if it doesn’t work out, be ready to regroup, switch gears, and try again somewhere else. There’s no time to pout—your plan B may be someone else’s plan A.
4. Tug at their heartstrings
Believe it or not, some buyers will bolster their offers with “love letters” to sellers about how much they want their house. Even crazier? They work! Don’t be afraid to make yourself known to the seller and appeal to their emotional side, especially if you’re competing with an investor or a cash buyer. Sellers almost always want to know something about the potential buyer. Here’s your chance to let them know. Tell the seller who you are, why you love the home, and what your intentions are for it. It’s been the difference in home buying successes and failures more times than one.
The right attitude goes a long way when it comes to house hunting.
Buying a home is an exciting time in anyone’s life, but it can also be really frustrating if you don’t go about it the right way. I know it sounds corny, but having the right attitude throughout is just as important to the house hunting process as your budget. You need to be flexible, open-minded, and focused throughout if you’re going to snag the home of your dreams. This competitive housing market is like the Wild Wild West, so you’ve got to be quick on your feet and can’t be afraid to shell out a few extra bucks here and there to get what you want. You may have to appeal to a seller emotionally if that’s what it takes, but take those Three Ps with you wherever you go. You’re ready now. Go get ’em, Champ.
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