The seller’s market trend from 2020 has been carrying through into 2021. Inventory may be low and competition may be fierce, but that doesn’t necessarily mean you need to put off your home buying dreams. There is a lot more that goes into purchasing a home than just going to a few showings and putting in an offer, but getting these things covered before you start looking is even more important now.
If you are going to need financing to purchase a home, which most buyers do, it is important to get pre-approved for a mortgage before you start looking. A pre-approval tells you the maximum purchase price and loan amount that you are eligible for, as well as other terms of the loan. Even if you have an idea of what you can afford, having that pre-approval letter in hand is important before making an offer. Sellers and their agents are going to want to see this “proof” that you are financially viable to purchase the home at the contract price before accepting your offer. With many houses only staying on the market for a matter of days, you can’t afford to wait to get this done until you find your perfect home.
Decide on Your Must-Haves
When inventory is low, it’s important to really understand what your “must-haves” are in a home. Are four bedrooms really necessary, or can you manage with three? Is that extra half bath critical? Are you really sure you’re interested in that home without a garage when you know how brutal Vermont winters can be?
Knowing what you need in a home helps you quickly decide whether it’s worth setting up a showing or whether you should keep looking. When you find a house you love that checks all (or most of) your boxes, you want to set up a showing quickly. If you’re wasting all your free time looking at houses that don’t meet your needs or your budget, the right house for you might sell to someone else right under your nose.
Contingencies & Other Contract Terms
When multiple offers come in, it’s not always the highest bidder who wins. Sometimes it comes down to the contingencies. If you’re using financing to purchase a home, there will always be a financing contingency (a clause that gets you out of the contract in the event your financing falls through). In some cases, you might want to consider an offer without an inspection contingency or fewer inspection contingencies. Remember, the fewer contingencies you have in your offer, the stronger it is and more likely it will be accepted when there are other offers on the table. What buyers may not know is that around here, many sellers and their agents tend to favor offers that involve financing through local lenders over out-of-state or national lenders because local lenders are generally more responsive and reliable when it comes to closing on time.
It’s also important to remember that an offer that doesn’t involve a contingent sale of another property will always be favored over an offer that does. But if you do need to have that sale contingency in the contract, it’s viewed much more favorably if the property is already under contract. When working with your Realtor on drafting an offer on a property where there may be multiple offers, talk about what contingencies you really need and those that you may be able to remove to increase the strength of your offer
Come In Strong
Remember that a seller's market is exactly what it sounds like. Now is not the time to “nickel and dime” sellers or try to come in tens of thousands of dollars under asking price if the home is reasonably priced. Remember, the appraisal contingency provides a safety net in most cases. Sellers have the advantage right now, and most of them know it. If you come in too low, don’t be surprised by a declined offer without even a counter offer. If you really love a home and the price is within your budget, consider coming in with a full price offer. If you know the house is going to sell quickly and there will be multiple offers, consider coming in a little above asking price. An escalation addendum is another great way to ensure you don’t pay too much more than the next best offer by setting your price ceiling and the escalation increment.
Buying a home during a seller’s market is not for the faint of heart, but if you hire a good Realtor and follow some of these tips, it should make the task a little less daunting.