I have been selling real estate for 12 years. Never have I seen a seller’s market like we are experiencing right now. The average days on market for a nicely maintained, appropriately priced home under $200,000 is less than a few days. If you are a pre qualified buyer, ready to buy, you better plan on seeing a house within hours of it hitting the market, or it may be gone tomorrow. Seriously. As a buyer, there are preparations that you need to take in order to take to get a house in this market.
First, you must be pre approved by a mortgage lender and have a pre approval letter in hand when you start looking at homes. Most lenders can pre-approve you over the phone by running your credit and asking you questions. If you don’t know of any lenders, ask your Realtor for a recommendation. If you want to increase your price range, be sure to get an updated pre-approval letter immediately. When houses are selling within hours, you need to be prepared with the appropriate paperwork that proves you are a strong buyer.
Next, be available to look at homes as soon as they come on the market, same day if possible. If you wait until the weekend, they may be gone. This means that you should be working with and have a relationship with a reputable Realtor. You should have a Realtor looking for homes that meet your criteria so that the second one comes on the market, you are notified and your Realtor is prepared to show it to you. Realtors works nights and weekends, so don’t be afraid to ask to see a house the evening a home comes on the market. I pride myself on getting my buyers into houses as the first or second showing.
Once you find the right house, write a strong offer. This is a competitive seller’s market. There will be other buyers looking at the house. If the house has only been on the market a day or 2 and it is priced right, sellers will not come down much on price. Sellers are aware that it is a seller’s market and have high hopes when they list their house. Writing a low offer, unless the house is grossly overpriced, is probably going to upset the sellers and not land you the house. If you are in a multiple offer situation, meaning there is more than 1 offer on the house, you should offer full price or higher if you want the house. Your Realtor has access to an Escalation Clause. This is a form that is submitted with your multiple offer stating that you will pay a certain amount over the highest offer. There is a cap to how much a buyer is willing to pay, but if there is some flexibility with price, this will often get a buyer the house. Other concessions that may make your offer stronger are as follows:
- You can purchase the house as-is. You can choose to get inspections, but don’t ask the seller to make repairs.
- If you have flexibility with a closing date, you can ask the seller what day they prefer.
- You can offer a 2-day post-closing possession to the seller. This means they will have 2 days after closing to move out. This is very generous.
- In some markets, I have heard of buyers writing letters to sellers, but in the Tippecanoe County market, this trend hasn’t taken off.
When there are multiple offers on a property, cash is typically king. More cash down is favorable to sellers, as is a conventional loan over an FHA or VA loan because these loans can be tough on sellers. You can still buy a house with a less favorable loan, it just may take more concessions or a higher purchase price.
As Tippecanoe County remains a popular place to live, the housing market will remain tight. Being prepared and quick to action will be in a buyer’s best interest. Once a buyer finds the right house, write a good, strong offer. If there are multiple offers and the buyer has flexibility with price, include an Escalation Clause with the offer. These tips will help you become a home owner in a crazy seller’s market. Good luck and call me if you want help!