Guiding a Buyer through a Seller’s Market

Be Pre Approved with your financing

Before you even begin to set out to buy a home, it’s critical that you have your Lender confirm your ability to buy a home by providing you with a Pre Approval for a loan. A Pre Approval goes beyond a verbal conversation between the home Buyer and their Lender. For a Pre Approval, they’ll want to review your credit, income and assets to determine your eligibility for financing. They’ll look at your credit report, your pay stubs, your bank statements and your tax returns, to name a few. The verbal conversation is what you’ll likely see in a Pre qualification which will be of no value to a home Seller considering your qualifications to afford to buy their home. We buy houses West Sacramento CA

This Pre Approval will be be in the form of a written letter from your Lender that spells out your ability to buy a home; the Seller’s home. This letter will be presented along with your Real Estate purchase contract.

Be fast with your offer

When you locate a home that meets your wants and needs, don’t lollygag about making the necessary arrangements to view a home. When you come across a home that you really like, you can imagine you’re not the only Buyer who thinks this home would be perfect for them. Let your Realtor know that you want to see the home right away. If it’s Monday when you see it online or your Realtor brings it to your attention, you don’t want to wait until Saturday to take a look. When Saturday rolls around there could easily be several offers on the home already, particularly if it’s a nice home, priced right (meaning the Listing Agent knows what they’re doing). The same holds true for when you actually went to see a home and you really love it, but you just need a few days to think about it. This is another recipe for missing out on the home you really loved as there was another Buyer who loved the same home you loved and jumped on it with their offer, so now the home is no longer available for sale. Unfortunately, this is one of the first, hard lessons learned by a Buyer trying to buy a home in a Seller’s market when they lose the home they really loved because they were asleep at the wheel. When you snooze, you’ll lose in a Seller’s Market.

Being fast, also involves demonstrating that you’ve agreed to terms of the contract that will be completed quickly and without prolonged delays. For example, if your Real Estate purchase contract has a standard time of 30 days for a loan commitment, consider cutting that in half to 15-20 days, as long as your Lender can assure you that this is possible. Or if the inspection time period standard is 10 days, consider completing your inspection in 5 days. All of these expedited times that you offer, lets the Seller know you’re serious. However, it’s critical that any shortening of time frame that you offer must be met so you’re not in default of your obligations as a Buyer. You don’t want to be in default as this will subject your escrow deposit to possibly being forfeited. I cannot provide legal advice as only a Real Estate Attorney can provide legal advice.

Be priced right on the money

Price your offer to win! Your Realtor should do a careful review of the home’s local market to determine fair value of the home and hopefully, the listing Realtor will be skilled at determining home selling prices so your offer can demonstrate that you want the home when your offer favors the list price or above. Because well priced homes can elicit multiple offers in a Seller’s market, it isn’t uncommon for a Buyer’s offer to be pushed above the list price of the home. Fair market value must be known and please know, that it’s not about taking a quick peek at Zillow for their Zestimates, as my Realtor friend Debbie Drummond will agree with me on.

Is this the time to low ball an offer on a home that you want? Not in a Seller’s Market it isn’t, as you’ll likely be competing with other Buyer’s for the home as I described above. As you recall, in a Seller’s Market the inventory is low, unable to keep up with Buyer demand, which equates to the ability to drive higher prices. If you’re financing, you’ll still need to have your Lender appraise the home’s value and if the appraisal comes in lower than the purchase price, you’ll have to go back to the Seller to advise of the appraised value. Of course, the Seller doesn’t have to accept the appraised value as they may want you to make up the difference from the appraised value and the purchase price, however, Sellers may also work with you to come to an agreement to revise the purchase price. This may mean the Seller will revise to the appraised value or they may want you to contribute towards the difference between appraised value and purchase price with the Seller also contributing by agreeing to reduce the purchase price somewhat. If no agreement is made then your escrow deposit would be refunded under the assumption that all other terms of the contract were met.

Another scenario can come into play if the home isn’t listed accurately to reflect fair market values when perhaps a listing Realtor isn’t skilled at pricing homes or perhaps has “bought the listing”. Buying the listing is when a Realtor agrees to list a home at whatever price the Seller wants simply to be able to get the listing. The Seller then realizes that after weeks and months of the home languishing on the market without a sale, they’ll likely agree to reduce the price. Unfortunately, by then, great damage has been incurred by the homeowner when their ultimate selling price is reduced had they just priced it right at the onset.

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