Even in market conditions that favor sellers, buyers can still close on a home they want for a price they can afford. At least, as long as you understand the challenges and do your due diligence. Read on to find out what you need to know to tackle buying in a seller’s market.
Understanding the Hot Market
In real estate, calling the market hot is simply a way of saying that demand is currently outpacing supply.
Typically, the higher the demand for property relative to the overall supply, the hotter the market and the more advantaged sellers are. This means higher costs and narrower windows for buyers. When demand drops or the total number of properties for sale increases, the market cools and there’s less pressure on supply. This puts the buyers back on top of negotiations.
Are We In A Hot Market?
Yes. If you’re currently in the market for real estate this is an unfortunate but unavoidable obstacle you’re going to grapple with.
Covid-19 and its concomitant economic impact have squeezed market supply in a big way. Supply chain disruptions and a shift in buyer behavior caused supply to plummet and trends don’t suggest a serious recovery in the short term. But, even still all hope is not lost for prospective buyers.
Don’t Despair, Just Prepare
There are specific steps you can take to mitigate the difficulties of a hot market. Let’s break them down.
1) Find a Real Estate Agent You Can Rely On
More than ever, a quality real estate agent is someone you need on your side in a hot market. Do your research and find an agent or agency with a proven track record, it’ll make all the difference when houses are being snapped up as they hit the market. A quality real estate agent will stay ahead of opportunities and set you up for success among the competition.
2) Get Pre-Approved For Your Mortgage
Properties move fast in a hot market, so have as many of your financial and legal affairs squared away as possible before you find “the one.” This will allow you to get the jump on opportunities as they arise. Also important in a hot market: pre-approval will signal to sellers that you’re a serious prospect.
3) Do Some of Your Own Investigation
You can benefit from monitoring local markets to determine exactly how competitive they really are for buyers. If you’re looking at online listings, pay attention to the duration of time that houses are listed for before going under contract. Take note of the gap between the listing price and the selling price. This info can clue you in on especially hot areas. Know where you should be concentrating your efforts and where you’ll be fighting an uphill battle.
4) If You Can Manage, Sweeten the Offer
Most likely, your offer will have some company. You can make sure yours stands out by sugaring the deal a bit. One strategy involves waiving contingencies on your purchase. These are usually aimed at protecting you in the event something goes awry, but hot markets can be tough and all’s fair in love and war. Though it may be tempting, try not to forego a home inspection altogether. The risk is probably not worth it.
Another approach is simply escalating your offer. You can include a clause in your offer that you’ll beat all other offers by a certain margin. These usually have a cap, but they can also result in some seriously inflated costs.
Ready to Get Started?
If buyers follow this advice and put in the work, it’s possible to brave the hot market and come through alright. But remember, you don’t have to go it alone. Find an experienced real estate agent and reach out to Heights Title, we’re here to guide you through the process every step of the way.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.