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5 Tips for Purchasing a Home in a Seller’s Market

5 Tips for Purchasing a Home in a Seller’s Market
Purchasing a home in a seller’s market doesn’t have to be challenging. Some preparation and a strategy may give you an advantage over other potential buyers and increase your chances of having your offer accepted by a seller.

1. Get lender preapproval or prequalification. Determine your loan options and obtain a pre-approval letter from a lender prior to beginning the home search. Some homes are going under contract within days, if not hours, so being able to move quickly with financing is often a plus. The letter gives you an idea of how much home you can afford – so you can easily eliminate homes not in your price range – and lets sellers know you have been vetted financially. Remember, being pre-approved does not guarantee a mortgage – be prepared to shop around with different lenders or work with a mortgage broker.

2. Be available to close as quickly as the seller requires. A seller wanting to close within 30 days may not be interested in an offer from a buyer who also has a home to sell prior to closing on a new one.

3. Offer more earnest money. Earnest money, typically 1% to 5% of a purchase price that eventually goes towards a down payment, is held in escrow until a sale closes. By offering more earnest money, you’re letting the seller know that you’re a committed buyer.

4. Make your best offer. In a seller’s market, you probably won’t be able to present an offer that’s below the asking price. If you love the property, present the seller with your best offer price.

5. Include an escalation clause. If you want your offer to compete with multiple offers, consider having your real estate agent include an escalation clause. The clause details how much you’re willing to pay over competing offers. Including an escalation clause in your offer is another way to show a seller that you’re a serious buyer.

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June Housing Report

In May, homes sold faster than at virtually any other time in the past decade, according to the latest RE/MAX National Housing Report. Low inventory and high demand in May cut Days on Market to 46, the second-lowest monthly number in the nearly 10-year history of the report.

May home sales topped April sales by 14.5%, and were down by 2.8% from May 2017. The median sales price of $251,673 was up 7.8%. To access the housing report infographic, visit: https://rem.ax/2phKHWT.

By comparison, homes averaged five more days on the market (51) in May 2017, 12 more days (58) in May 2016 and 18 more days (64) in 2015.

“Even with low inventory and the Federal Reserve raising interest rates, homes are going from ‘for sale’ to sold 28 percent faster than three years ago,” said RE/MAX CEO Adam Contos.

With 11 metro areas increasing the median sales price year-over-year by double digits, May is still a seller’s market, and homebuyers should expect to compete with other buyers when they are ready to make an offer on a home.

“Be prepared — that’s my message to potential homebuyers in this summer selling season,” added Contos. “Make sure you are pre-approved with a lender, try to make a clean offer with no contingencies and, if possible, consider offering favorable concessions to the seller such as a flexible closing date. Pairing today’s real estate technology with the guidance of a professional RE/MAX agent, can help you find the right home.”

Find the complete report here