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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