Are you ready to ditch renting and jump into homeownership? Buying a home and taking on a mortgage are huge milestones that pave the way for exciting growth both personally and financially. Not only does homeownership provide full autonomy, but also the chance to build sustainable wealth.
However, purchasing a home can be overwhelming for a first-time home buyer, especially in a seller’s market like we are facing right now. Simply put, a seller’s market is when there are more prospective buyers than there are homes for sale. This shift in the market is not abnormal, but it does bring about unique challenges and opportunities. Check out some tips for first-time homebuyers in a seller’s market.
Work with Seasoned Professionals
It’s essential to have a competitive edge in a seller’s market and hiring a team of practiced experts gives you an advantage over your competition. When searching for a real estate agent or lender, you want someone on your team with experience. Industry veterans offer a keen understanding of the local market, an ability to keep up with the fast-paced nature of the business and invaluable guidance during your journey.
Get Prequalified* Before Looking
Before you start the fun of house hunting, take the time to get prequalified. Getting prequalified for a mortgage tells you how big of a loan you qualify for, which is another way of telling you how much home you can realistically afford. This step lets the seller know you’re serious and makes your offer that much more attractive!
Lead with Strongest Offer First
When competition is fierce and homes are moving quickly, leading with your best offer is crucial. Unfortunately, offering listing price (or lower than listing price) isn’t always a guarantee in a seller’s market where buyers don’t have the upper hand. If you’re able, offer slightly above listing price to show the seller you’re eager to seal the deal. If you’re not sure what to offer, an experienced realtor will be able to provide insight on what amount is realistic for the property.
Be Prepared for a Bidding War
A bidding war occurs when multiple buyers are hoping to purchase the same property. While this is most seller’s dream, this situation is less ideal for the buyer. Typically, bidding war winners either make an all-cash offer, waive contingencies or add an escalation clause.
However, bidding wars don’t only boil down to finances. Many buyers try to appeal to the seller’s emotional side with either a personal letter or video to have a distinctive edge over the competition. In these letters or videos, it’s all about forming a personal connection between seller and buyer – try introducing yourself and your family, highlighting what you love about the home and talking about the future you envision there.
Our team is eager to empower you throughout the entire home loan process. To explore your options or learn more about being a first-time homebuyer in a seller’s market, reach out to a PrimeLending expert for individualized guidance.
*A pre-qualification is not an approval of credit, and does not signify that underwriting requirements have been met.