Though buyers may be less joyful than sellers over the market, knowing that it will take far more effort on their part to secure a deal, all hope is not lost.
We’ve compiled a list of top tips for buyers to ensure the greatest success while surviving a seller’s market.
Both sellers and buyers should do their research when looking at real estate professionals (brokers, agents, etc.) rather than simply hiring the first they find. The right real estate professional can be extremely advantageous, especially while navigating a seller’s market, but how do you know they’ll be right for you?
Fully vetting a real estate professional may include checking their references, visiting the RECO website to confirm their registration, looking up their online profiles (LinkedIn, Facebook, etc.), and looking for web reviews.
When you have the list narrowed down, interview your top 3 or 4 candidates to ensure a good fit. Get everything – services, prices, incentives, etc. – they are offering explicitly stated in writing for easy comparison.
Know What You’re Signing
Before signing anything while conducting your search, including signing anything provided by your real estate professional, know exactly what you’re agreeing to. Make sure every clause is explicitly clear. If anything is unclear, ask questions. If you’re still unsure, it may be wise to seek independent legal advice for a second opinion.
It’s best to be fully informed of everything that the buying process entails before starting your search. That way, there are no nasty surprises at any crucial junctures.
Also do some cursory research into what’s available – read the listings, go to open houses, and ask questions to get acquainted with the market in your area.
Set a Budget
Especially when it comes time for a bidding war (an all-too-common occurrence in a seller’s market), you’ll be happy you’ve set a firm budget for how much you can afford. You need to have a hard limit when it comes to making offers. To help yourself stay within your budget, search for homes listed reasonably below your maximum limit.
Your budget also needs to include all other expenses you may/will occur during the buying process. Don’t forget about legal fees, land transfer tax, mortgage insurance, utility hookups, home inspections, home appraisals/surveys, and moving costs.
Unfortunately in a seller’s market, sellers are finding they are able to insist on offers without conditions – that is, buyers who aren’t insisting on waiting for home inspection, mortgage financing, or the sale of your existing home. However, these conditional offers protect the buyer from ending up incurring unexpected expenses.
Only waive the conditions of your offer if you have enough fluid finances to cover any incidental expenses you may incur, especially if you forego the home inspection.
Details, Details, Details
When making an offer, include every possible detail – what’s included (appliances, light fixtures, etc.) and be clear what renovations need to be completed before closing, based on the home inspection. That way, when it either comes time for negotiation or acceptance of your offer, your expectations are already explicit.
You are likely to encounter many competing offers while searching for the perfect home. To stand out from the crowd in a bidding war, make your offer as competitive as possible. Work with your real estate agent to ensure your offer is neither too high nor too low.
Getting prequalified or pre-approved for a loan makes your offer speedier and therefore more likely to catch a seller’s eye. Another way to look more attractive is to offer as large a down payment as possible (20% or more) to make yourself look financially strong.