Unless you’re buying a new construction home this year, you’ll likely experience a lot of competition among other buyers. In the D.C. metro area, it’s a seller’s market. This is one the best places to live in the U.S. with one of the most valuable housing markets in the nation. The supply of homes can’t quite keep up with the demand from new generations of buyers entering the market, so it is especially important for buyers to be properly prepared before starting their home search. We here at the Keri Shull Team have a lot of experience buying and selling homes in all different market conditions, so we’ve put together a few tried and true tips for buyers to help them be successful in a seller’s market. Give yourself a leg up on the competition this year by taking tips from the pros!
Here are five tips for home buyers to help them be successful in a seller’s market:
Tip #1: Work with an “Experienced” Agent
Choosing the right agent is one of the most important first steps for a prospective home buyer. In a seller’s market, you want to be sure to choose an experienced agent. However, experience in years is different from experience in sales. In order to have the best agent on your side, you will need to consider the number of homes an agent has sold each year more than how long they’ve been in the business. This will give you a good indication of whether or not you will be “in-the-know” about upcoming listings that match your criteria first, before other buyers. Writing a strategically crafted offer is also absolutely critical. You can’t choose an agent with a discounted commission and expect to get the same level of service from an agent who charges the standard price. Ask your agent about their experience competing in a seller’s market and what tips they have that will help you win in a bidding war. You truly do get what you pay for when choosing a real estate agent or team, so make sure you choose the right agent when buying in a seller’s market.
Tip #2: Get Pre-Approved for a Mortgage
In a seller’s market, things move fast. Prove to the seller that you are a serious buyer by getting pre-approved for a mortgage before you start your home search. Not only will this speed up the process once you find a home you love, it will also help you make an informed decision about how much you can afford. After you choose the right agent, he or she will be able to refer you to a truster lender who will help you get pre-approved for a loan. Don’t risk losing out on your dream home because you didn’t have proper financing in place. Understand that the seller’s agent will be looking for lenders that move quickly and are known in the industry for closing loans on time. Do not select a huge bank that closes their doors at 5pm or an online lender where the listing agent will end up routed through a call center to verify your qualification because that is a sure way to ensure your offer will not be selected. Get pre-approved for a mortgage before you start house hunting to be a successful buyer in a seller’s market.
Tip #3: Don’t Overanalyze a Home’s Listing Price
A home’s listing price is just a starting point for buyers and their agents. You may end up paying less or more than the listing price, so don’t get caught up on the price tag when you’re trying to decide how much you like the house, and pay more attention to recent sales in the area. Listing agents and sellers have their own strategies for how to identify a listing price. Some agents list extremely low to inspire a huge bidding war, and some list high to have room to negotiate. If you study recent sales, that should give you a strong indication of what the appraised value will be, but the only person who knows how much you want to spend on a home is you. Do not expect your agent to have a crystal ball on what number you will need to offer to win, so make sure you think about the highest price you are willing to pay. Also consider if you will be okay losing the home to another buyer if they were to bid just a dollar more. Many times in a seller’s market buyers withhold some money in their offer, and when they find out another buyer beat them by offering just $10,000 more, they are upset with themselves and wishing they would have just bid a little more. Of course the price must align favorably with your budget, but if you fall in love with a home, think more about the rest of your life and less about the numbers.
Tip #4: Make Your Best Offer
Don’t play the lowball game when you’re buying in a seller’s market. Chances are another buyer will offer more and beat you to the punch, even if you planned on counter-offering more money down the line. It’s all about timing. When you fall for a home in a seller’s market, make your best offer right away. You’ll have a better chance of getting the home you want and put the seller in a tougher position where they must accept your offer or risk losing money waiting for another offer. If you’re working with the right agent, he or she should advise you to always lead with your best offer when you find a home you love.
Tip #5: Prepare for a Bidding War
Knowledgeable sellers price their homes competitively to induce multiple offers, especially in a seller’s market. The D.C. area is the fourth most valuable housing market in the country, so the competition will be fierce this year. Your agent may recommend hunting for homes that are below your maximum price point, so you have enough leverage if you step into a bidding war. When you choose the right agent, he or she will be an expert negotiator and know exactly how to handle a bidding war, but it’s still a good idea for you — the buyer — to be prepared too. Bidding wars can be stressful, but with the right agent, it could be one of the final steps to closing on the home you’ve always dreamt of buying. Study recent sales that match your criteria in the neighborhood you want to buy in before you find the perfect home, so that you’ll already have a good understanding about what you will need to bid to win when the time comes.
The bottom line is that in a seller’s market, the buyer has to be as prepared as possible, ready to act fast, and work with a truly experienced agent to be successful. If you’re looking to buy a home this year, contact the Keri Shull Team! We’re the top real estate team in the region and we know how to help buyers be successful in a seller’s market. We even offer a VIP Buyer Guarantee to all of our clients! Call us to learn more.