Whether you're buying a house for the first time or it's the first time you're buying in a seller's market, it can be intimidating. In HomeLight's recently released Q4 2020 survey, even though it's a seller's market, 84% of real estate agents say the inventory in their area is lower than they thought it would be.
We have a few tips that'll help prepare you for a competitive market and get you one step closer to buying the house of your dreams.
1. Understand the market and the area you want to live in
Naturally, when you start looking at houses, you're going to want to learn as much as you can about it. You'll want to know if there's an HOA and if they're strict with their rules. You'll want to know what the school district is like and how hard will it be to get involved with the community.
With so much you need to research, you can't forget to follow the market trends in your desired area. You will want to keep an eye on how much housing prices fluctuate and how much house can you afford. Fortunately, you can get a lot of this information from your real estate agent.
Which leads us to our next tip.
2. Find a real estate agent you can trust
It's crucial that you do some research on the agents in the area because you don't want to hire just anyone. The real estate agent you choose to work with is going to be the proverbial encyclopedia that you can turn to to answer any questions you have. Your agent should be able to tell you the ins and outs of the local market, they'll know where to find houses that fit within your needs and budget. They'll also work on your behalf to get the best deal possible. So choose wisely.
3. Pre-approval letter is better than a pre-qualification one
A pre-approval letter is different from a pre-qualification letter. While a pre-qualification can help you get your foot in the door with the lender, a pre-approval letter is more like a conditional approval saying that your finances and assets have been underwritten.
If you have a pre-approval and other offers have a pre-qualification, your offer is more enticing to the seller. A pre-approval letter gives you a leg up because it lets the seller know that you basically have the funds to buy their house, which means the deal is less likely to fall through.
4. Stand out from the rest with a strong offer
Around the nation, 84% of agents who took part in Homelight's survey report they are seeing bidding wars on the rise or at their peak during the 4th quarter because the inventory is so limited. So, a pre-approval letter is a good thing to note in your offer, but you also want to give them your best offer when you first (and hopefully only) offer. This means offering to pay the full asking price, or even slightly above. You can also sweeten the deal even more by submitting an offer free of any contingencies or requests.
5. Be prepared for steep prices
It's a seller's market in 92% of the country and that means sellers have the ability to ask more for their houses than if it was an even market. As a buyer, not only will you run into homes with steep price tags, but should you enter a bidding war, the price could be increased even further! Again, this is where a pre-approval letter will come in handy. With that letter, both you and your agent knows how much you really can spend and you won't get caught up in a bidding war that could potentially cost you the house of your dreams.
A seller's market can be a competitive one, but it shouldn't scare you from diving in if you're ready to buy. With these tips and the right real estate agent who understands what you want in a home, you'll be a homeowner in no time!
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