5 Ways Buyers Can Compete in a Seller's Market
It's a dog eat dog world out there right now in real estate. We have hundreds of buyers and very few sellers. While it might be scary to consider listing your home when you know you have to buy, sellers really do have all the power and leverage. But where does that put buyers? Many sellers are scared to list and sell their home because they understand the reality that they're going to have to buy as well. So, what can buyers do to compete in this type of market? Here are five ways buyers can compete in a seller's market.
#1. Have Your Own Dedicated Agent
You can probably find 10,000 articles on how to compete but I would say one of the number one things is using a buyer's agent. If you try to do this alone, you're going to get trampled and eaten alive by other buyer's agents and buyers that have come prepared. Make sure you're using someone that is well-versed in buyer negotiation. A lot of real estate agents and brokers help buyers and sellers or one of the other. While you can definitely use one that helps both buyers and sellers it's important to you someone that is well-versed in buying real estate.
This is not a market to go it alone. You need someone that is not only dedicated to you but understands the negotiation process, has excellent communication skills, a fast response time, and has an excellent track record of their buyers in getting the home they want. Ask about reviews, check out referrals, and ask how many times that agent has got the home when competing with other buyers.
#2. Be financially ready to go.
If you have all of your ducks in a row, have all your peas and cues in order, and you've done all the financial work necessary, chances are your offer will get looked at more than other offers that may not be as prepared. Make sure you have a preapproval letter stating you can afford exactly how much you are offering, you have a decent down payment and earnest money deposit, and you are prepared with financing all the way from start to finish and have proof of funds. You will probably need a letter directly from the lender stating that you have already done your financial homework and are ready to go.
#3. Keep it simple.
Complicated offers, multiple letters of how much you love the home, and the long drawn out contingencies can become a blur to most sellers. If you keep it clear, simple, and concise, your offer will be easy to read and easy to accept. If your offer contains multiple contingencies meaning you'll need to sell a house before buying this one or you have other neighborhood feasibility issues, it could only muddy the waters. While it's not always a good idea to waive the home inspection contingency, given the right home and the right situation, this may be necessary. We always strongly suggest discussing contingencies with your real estate agent because every deal is different.
#4. Have several plans in place.
An escalation clause might be an option when it comes to making a bid on a competitive property. An escalation clause will technically offer over your offer amount up to a certain amount in particular increments over the highest priced offer. For instance, if it's a $400,000 home, and you offer $400,000, you can add in an escalation clause up to $450,000 in $10,000 increments. Meaning that if someone else offers to buy the house at $410,000, you will automatically offer $420,000, $10,000 over the highest priced offer. The seller, however, must be able to prove that they have an additional offer. Your offer will continue to rise until you've reached your cap. It's important, however, to realize that the home must appraise for the higher price if you're planning on financing the entire amount. If you can bring additional money to the table that will cover the inflated cost, you won't need to worry about the appraisal.
#5. Make an emotional connection with the seller.
This might be hard to do any unique balance when you're trying to keep the offer simple. However, in some situations, it's worth a shot. If the seller likes the buyer, they may be more inclined to sell the property to a particular buyer. The seller can sell the property to whomever they want but if the seller establishes a connection with the buyer/bidder, the offer might stand out from other similar offers. Certain ways you could do this would be to ask the seller to remain in the home during a showing so that you can ask questions and 'ooo and awe' throughout the house. You can also offer a personal appeal from the bidder to the seller, however, some real estate agents discourage this practice and face-to-face encounters in today's climate might be impossible but there are ways to appeal to certain sellers. It's important that your buyer's agent communicate with the listing agent on what the sellers really looking for so that you can appeal to the seller on a level that matches their comfortability.
It's a tough market out there and we won't pretend to say that it's easy to buy a house in the Granbury Texas real estate market, but with the right agent and understanding the situation, little bit of planning and preparation, you can get the home you really want. Contact us today to be put in touch with one of our dedicated buyer's agents throughout Granbury. We understand the market and we sold and bought homes throughout Granbury for decades and understand every market is different as well as each buyer and seller.