A seller’s market is when the inventory of homes in an area is low but demand from buyers is high. A seller’s market puts home sellers at an advantage. They have more leverage when it comes to negotiations because there are more buyers competing against one another.
Buying a home in a seller’s market can be challenging, especially if you’re on a strict budget. Here are tips to successfully buying a home in a seller’s market:
- Add an escalation clause – Even if you make a strong initial bid, consider adding an escalation clause for 2-3% if it’s within your budget. Doing so will allow you to automatically bump your offer up if the seller has another bid higher than yours.
- Appeal directly to the seller – Send the seller a letter explaining who you are and why you want to buy the house. If the seller has an emotional connection with you, your bid may become a priority even if it’s not the highest.
- Provide flexible terms – If you can’t compete with your offer, consider non-price factors. For example, offer a flexible closing date that appeals to the seller’s needs. You can also waive certain contingencies.
- Submit a strong offer – You may be tempted to start low, but this strategy seldom works in a seller’s market. A low bid may be ignored. Odds are the seller will have another bid lined up anyway, which means you’ll lose out to a competing buyer almost immediately. You’ll rarely have the chance to counter since many sellers will have more than one offer to choose from in a seller’s market.
Keep these tips in mind if you’re buying a home in a seller’s market. For more professional real estate advice, be sure to speak with a local real estate agent at Randy Lindsay today.