3 Tips For Buying In a Seller’s Market
Home sales in the U.S. surged to a 15-year high in 2021, with 6.12 million properties sold nationwide. This is a 22% increase since 2007 and 48% since 2008 when homes sales in the U.S. dropped to 5.02 and 4.12 million respectively.
Meanwhile, low borrowing rates and high buyer demand continue to tilt the housing market in favor of sellers. December 2021, for instance, saw the lowest amount of monthly available inventory this century, with only 1.8 months‘ worth of listings.
And with 6.2 million homes expected to sell in 2022, the housing market is unlikely to slow down anytime soon. This is great news for sellers whose homes have been appreciating at a rapid pace. But what does it mean for real estate agents and qualified buyers?
Top Tips For People Buying In a Seller’s Market
Since Covid, individuals and families have been prioritizing space more than ever, so it’s only logical that buyers will want more room to grow in their personal lives.
Homeownership can make this dream a reality. But in today’s competitive market, how do you succeed as a real estate agent and help your clients snag the perfect home before someone else does?
Fortunately, in this article, we’ll go over three essential tips to get your clients/buyers ready in a sellers’ market and give them an edge over other buyers.
Tip #1 — Get your buyers pre-approved now for more than the listing price of the home they’re looking to buy
As a real estate agent, you’re probably aware that the best time to get your clients pre-approved for a mortgage is right now. Not only does this show that your buyers are serious. It sends a message that they’re financially capable of closing on a home, providing more confidence to sellers.
Consider this: Today’s market conditions are such that many homes receive multiple offers the moment they’re listed for sale. As sellers receive these offers either at or below the listing price, they have no obligation to counter each one with a new asking price. They can just sit back and have their agents request the highest and best offers from the group. Meanwhile, competing buyers are unaware of how many offers are on the table, nor how much each one is worth.
Keep in mind that when sellers request the highest and best offer, the winning bid topples all of the other (lower) offers on the table, so you may only get one shot at a purchase agreement. This is why it’s important to lead with an initial offer above the listing price, especially when multiple buyers are vying for the same home.
A strong initial offer becomes that much harder for sellers to resist. In some cases, the seller may be tempted to accept it and avoid a back-and-forth with multiple buyers, which can drag out the home selling process. Also, if the seller sees that your clients have been pre-approved for a mortgage loan (as opposed to pre-qualified), this can give your buyers an edge over others and help them get one step closer to owning their dream homes.
Tip #2 — Prep your buyers to be flexible with contingencies as much as possible
When prepping your clients for a deal, it’s important to maintain creativity and flexibility throughout the home buying process.
Work with them to review their mortgage pre-approval letters and supporting verification documents (e.g. pay stubs, tax returns, W2s, etc.). If they’re likely to receive final approval from their lenders, you can safely advise them to remove the mortgage contingency in the deal and guarantee their funds to buy.
On a different note, beware of the “all-cash, no-contingency” offer, as it doesn’t necessarily mean that a buyer has all of the funds needed to close sitting in their bank account. It just means there are no contingencies that would prevent the seller from getting the full offer amount upon closing. Besides, your client may withdraw their offer before the final closing date for several reasons. The only difference is that they risk losing their initial deposit since they removed all contingencies.
Removing the mortgage contingency, in particular, proves a deeper commitment from your buyer to close on the home, which won’t go unnoticed by the seller. It may also trump other offers that insist on keeping most contingencies throughout each stage of the home selling and buying process.
If you want an even bigger edge over the competition, prep your buyers to be flexible with the appraisal contingency as well. If your buyers are comfortable with the sales comps in the market, and if they have the funds to pay the closing difference should their appraisals come in slightly off the mark, then they can safely waive the appraisal contingency while negotiating the initial offer. This sign of confidence tells the seller that your buyer is highly committed and motivated to close on the home.
Lastly, if timing permits, prep your buyer to be flexible with the closing date. Sellers might have unforeseen circumstances arise that could push their closing dates out further than expected (e.g., a family emergency, a pending job transfer, etc.). If your buyers are willing to be flexible with a closing date beyond what’s required, sellers may find the offer hard to pass up. Moreover, pushing the closing date can work in your client’s favor, too, as it gives them more time to organize their finances, making it easier to deliver on that all-cash offer.
Tip #3 — View as much of the property before you can see it in person, including all photos, videos, and 360 tours
In real estate, less is not more. That is, the more information your buyer has at their disposal, the sooner they’ll make a strong, serious offer on their dream home, getting you and your client much closer to sealing the deal.
Professional real estate photos, high-quality videos, sweeping aerials, and 360 tours offer incredible views of the home that buyers can’t always get in person, so be sure to send your clients all available media of the property beforehand. After all, people “eat with their eyes,” as the saying goes, but they also buy with them.
This is why taking a virtual tour of the home before viewing it in person is helpful. It allows your buyers to take in the property at their own pace, without feeling rushed or pressured.
Feeling out the home in advance, which includes learning the property’s layout and flow with a 360 tour or getting a better sense of the neighborhood with real estate drone photography, affords your buyer more time to make an honest decision about the home. This way, they’ll already have a solid idea of how the home can fit their requirements by the time they visit it, which can lead to a strong initial offer (sometimes on the spot!).
If the home lacks professional media, such as high-quality real estate photos and videos, consider reaching out to the listing agent and requesting all marketing materials that may be available. This will further demonstrate that your buyer is serious about purchasing the home.
So there you have it! Three important tips to get your buyers ready in a seller’s market. To find the best real estate photographers near you (and crush tip #3), visit our homepage.