In a seller's market characterised by high demand and soaring prices, it's not uncommon to feel like you're caught up in a frenzied bidding war. The pressure to outbid competitors and secure a property can be intense, leading to emotions running high and decisions being made hastily. All of this can make buying a house feel challenging, if not impossible.
For would-be buyers, scoring a home in this market is challenging but there are some ways to make it easier. Here, we list all the tips for buying a house in a competitive market to heighten your chances of a successful purchase.
Buying in a seller’s market - 6 strategies
By following these tips and working with a knowledgeable real estate agent, you can increase your chances of success and find the perfect home in even the most competitive of property markets:
1. Ensure you get pre-approval, early on
Before you dive into your property hunt, ensure you've obtained pre-approval from your lender. Having your finances sorted early is crucial in this competitive seller’s market. Once pre-approved, you'll have a clear idea of what you can comfortably afford, giving you flexibility when presenting offers to sellers.
Bear in mind that in a competitive market, preapproval doesn't guarantee your offer will be accepted.
When sellers face multiple offers, they often prefer the safest option. If you're relying on a mortgage, it's crucial to have a full pre-approval in place so that all that remains is for the lender to complete a property valuation. This can sometimes be seen as the equivalent of being a cash buyer and may improve your chances of securing a property ahead of the competition. A full home loan pre-approval is when a lender has fully assessed your individual position, and not relied on you to input your details into a system.
2. Act quickly – but not hastily
In a competitive market, homes can sell fast. When you find a home you like and that matches your requirements, don't wait around to make an offer. Be prepared to act quickly and submit the amount you want to pay as soon as possible to increase your chances of success. If possible, inquire about submitting an offer before the auction day; the seller might find it acceptable and agree to the deal, saving you the hassle and uncertainty of competing in the auction. It's worth exploring this option with the seller or their agent to potentially secure the property before the auction takes place.
3. Prepare to pay more than the asking price
In typical markets, a home's listed price serves as an upper limit. However, in a seller’s market, the listed price often acts as a starting point. For this reason, you may need to consider offering at or above the market value. If you can offer cash – even better.
Moreover, if you're serious about buying a home now, a good strategy is to search for homes below your spending limit. This way, you have room to bid up without dipping into savings or going outside of your target price point. This approach allows you to compete more effectively in a market where offers often exceed the listed price.
Before you start searching for a home, figure out how much you can afford to spend. Consider factors like your income, expenses, and how much you've saved for a down payment. This will help you narrow down your options and avoid wasting time looking at homes that are out of your price range.
4. Expand your search
In a seller’s market, finding a home that matches all your criteria including size, location, and price may be challenging. Consider broadening your search criteria to include properties that may not initially meet all your preferences. Explore neighbouring areas or suburbs that offer similar amenities but may offer better affordability or availability. Additionally, be open to considering properties that are not actively listed on the market. Hidden property gems and off-market listings can sometimes offer great value and less competition. By expanding your search and keeping an open mind, you increase your chances of finding the perfect home in a competitive market.
5. Be flexible, especially with terms
Flexibility is key in a competitive market. Sellers may have specific preferences or timelines, so being adaptable with your offer can make it more attractive. Consider factors like closing dates, contingencies, and any additional terms the seller may prioritise. Being flexible could give you an edge over other buyers and increase your chances of having your offer accepted.
6. Be willing to wait it out
No doubt navigating a seller’s market can feel intense and overwhelming at times. Properties may be snatched up quickly, and bidding wars can escalate rapidly. However, it's essential to remain patient and stay focused on your long-term goals. If you haven't found the right property yet or if the competition is too fierce, don't feel pressured to rush into a decision. Take the time to assess your options carefully and wait for the right opportunity to come along. By staying patient and persistent, you increase your chances of finding the perfect home and making a successful purchase, even in the most challenging market conditions.
If you can afford to, wait for the market to simmer down. Use the time to continue to monitor market trends, keep an eye on new listings, and refine your search criteria. Use the opportunity to save more money for a larger down payment. Remember, in real estate, timing is everything, and sometimes, a little patience can pay off in the long run.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
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