It didn’t take long to find your dream home online. Located close to work, schools, and shopping, it meets every item on your wish list. Unfortunately, you’re not the only one ready to pay the listing price for the property. And in a seller’s market, where there are more ready buyers than homes, you’ll likely need to do more than offer the full asking price to claim a seat at the closing table.
Preparation is key to getting the home you want without blowing your budget. Here are five tips that might give you an edge when buying a house in a seller’s market.
1. Secure a mortgage loan prequalification or preapproval.
Speaking with a mortgage lender before starting your home search is the first step for most serious buyers. You’ll need to provide the lender with financial information so they can determine whether you will qualify for a home loan. Use the resulting prequalification or preapproval letter, which includes your maximum loan eligibility, to let sellers know you’re serious about your offer.
Without a letter proving you have the finances to close the deal, competing with other buyers could be difficult. Most sellers and their agents only want to deal with buyers ready to close on an acceptable offer.
2. Partner with an experienced real estate agent.
An experienced real estate professional should already be familiar with the temperature of your local housing market. They can guide you through the home buying process based on their experience and knowledge of current and upcoming inventory. When you let them know what you’re looking for in a home and provide a copy of your prequalification or preapproval letter, they can steer you toward properties that match your needs and budget.
3. Consider both existing homes and new construction homes.
Depending on your local market, an existing home might have pricing that better aligns with your budget. However, there may be more new construction homes or spec homes available for immediate purchase. Keeping your options open can help you find a home that fits your needs, even in a seller’s market.
4. Prepare to make your best offer.
Submitting an initial offer below the asking price may not be the wisest move in a seller’s market. Unlike in a buyer’s market, where there’s more inventory than buyers, a lowball offer is likely to be dismissed. An experienced real estate agent can help you craft a solid offer that outshines the competition. Be prepared to make an offer above the asking price.
5. Explore your financing options now.
In hot markets, homes are often listed for only a few days or hours before selling. You’ll need to act quickly when you come across a property that meets your needs. If you wait until you find your home to get your financial ducks in a row, it might be off the market by the time you’re ready to make an offer. Find out how much home you qualify for in less than 10 minutes by completing a Magnifi Financial online application. With a prequalification letter in hand, you can search for homes below your budget. Doing so might give you the financial breathing room you need to increase your offer and win the keys to your new home.