Atlantic Blog

Picture this — you're in the market for a new home, and you quickly find one that is perfect. It has all the features you've been dreaming about and is in your price range. So, you put in an offer. 

However, your excitement quickly turns when you discover that you were outbid or, worse, weren't even given a chance to bid in the first place. Unfortunately, the current real estate environment is a "seller's market," which can quickly lead to a frustrating home-buying experience.

But all is not lost. You will find your perfect home; it just may require a little more work, patience, and understanding of how to navigate this type of market.

What is a Seller's Market?

In real estate, a seller's market is when home inventories are low, causing a spike in demand. You can typically identify a seller's market when: 

• Homes sell quickly, usually within a few days of being listed,
• Bidding wars break out between potential buyers, driving up prices, or
• Homes are selling over the asking price.

In contrast, a buyer's market is when home inventories are high. The Great Recession of 2008 is a perfect example of a situation that created this type of scenario. Many homes went into foreclosure, causing the number of properties on the market to skyrocket. With more houses for sale and fewer buyers, home values dropped significantly.

Tips for Buying a Home in a Seller's Market

While, on the surface, this type of market may have you feeling uneasy, there are strategies to help you navigate a seller's market: 

1. Get Pre-Approved for Your Home Loan 

Becoming pre-approved means your lender reviewed various aspects of your finances, such as your credit score, income, debt, and assets, and determined how much money you can afford to borrow. You will also lock in the interest rate on your mortgage for a set timeframe – usually between 30 to 60 days. This benefit allows you to shop for a home without worrying about rates increasing. 

A pre-approval is crucial for two reasons in a seller's market:

• It helps keep you within your budget and lets you know how much you can spend.
• Homes sell quickly, and sellers want to know you have financing lined up. For this reason, most sellers won't consider offers if you aren't pre-approved for a home loan.

An Atlantic Mortgage Loan Originator can help get you started.

2. Hire a Great Real Estate Agent

In a seller's market, homes sell fast, usually within a few days of hitting the market. Therefore, you want an agent who knows what is coming for sale before other potential buyers. An experienced real estate agent will also be able to provide insight on bidding strategies should multiple buyers make offers on the property you want.

3. Set Your Bidding Budget & Stick to It

If you make an offer on a home, chances are it won't be the only offer that particular house will receive. So as bids start to rise, it's crucial that you're not making emotional decisions.

For example, winning may be your primary goal if you're naturally competitive. Or, if your partner loves the house, you may want to triumph for their sake. Either way, your goal should be about something other than winning. Instead, focus on your budget and what you can afford. You'll want to set your top-line budget and stick to it. Knowing when to walk away is just as important as your final bid.

4. Make Concessions

If you don't have the budget to play in a bidding war, you may offer concessions to the sellers instead. These items could include covering a portion of the seller's closing costs or paying for necessary repairs yourself. While these compromises could still be costly to you, they may be less expensive than a bidding war. If a seller wants to close quickly, concessions may help sweeten the deal and speed up the process.

5. Be Patient

It's easy to fall in love with a home. But buying a house is one of the most significant financial investments you'll make in your lifetime. For this reason, you want to ensure you're making a wise financial decision. While the market may be in a frenzy, be patient, and the right home will find its way to you.

Takeaway

Buying a home in a seller's market can be challenging – but it's not impossible. With a pre-approval and an excellent real estate agent by your side, your new home isn't far away. Be patient and stay within your budget; again, knowing when to walk away from a home is just as important as making an offer.

We're Here to Help!

If you're ready to begin your new home search, we're prepared to help. Get started by signing up for our Home Buyer Seminar where our home loan experts will answer all your questions. We aim to ensure you understand the home-buying process and are financially prepared to take on this next chapter of your life.

To speak with a home loan expert or begin the pre-approval process, please stop by any of our convenient branch locations or call 800-834-0432. 

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This publication is distributed for educational purposes with the understanding that the authors are not engaged in providing legal or financial advice. The authors assume no legal responsibility for the completeness or accuracy of the published contents.