Have you already started the house-hunting process, or are you thinking about starting the house hunting process but you’ve heard it’s a seller’s market?
I have got five tips on how to survive in a seller’s market.
Hi, my name is Johanna Dueren. I’m with Circa Properties, and I am here in St Louis, Missouri where we have had a seller’s market for years. I think we’re going on maybe six or seven or eight years now. It has consistently been tough for buyers in our market to find something to live in. The inventory is just not there, so competition is super high and for buyers it can be very stressful.
I have five tips on how to survive in a sellers market, things that will maybe get you a little bit closer to the house that you are looking for and hopefully minimize some of the stress on your end while you’re going through the
Step number one, and I know this is painfully obvious, but get your financing in order! And by just getting your financing in order, I don’t mean check your credit and make sure you’ve got some money in the bank for a down payment. Get in touch with a lender, a really good lender. Ask around, ask your agent, ask me. Ask somebody that you know that recently purchased a home that had a really good experience with their lender, and get in touch with somebody that really knows what they’re doing.
What you’ll want to do is not just get a pre-qualification, you’ll want to go through the entire process. What a good lender will do is take all your information upfront, way before you’ve even found the house. They’re going to get all of your pay stubs, they’re going to get your tax returns, they’re going to do all the work on you to make sure that you are qualified so that by the time you’re ready to start looking, Really all you’re doing at that point is just finding the house and finding something that will only depend on getting it appraised to make sure that the value is there by the time you’re ready.
So spend the time with the lender. Go and meet with the lenders, sit down with the lender, ask all of the questions, because what you don’t want to do is get yourself where you’re in the middle of it, and then suddenly you don’t really understand what’s going on and you’ve got all the questions about financing. Get all that out of the way before you even start looking.
A really an important part of that as well is making sure that you’re pre-approved for an amount that you’re comfortable with. So if you get a pre-approval letter for $400,000 but what that monthly payment really looks like is a whole lot more than what you’re comfortable with on a monthly level, then we don’t want to be looking in the $400,000 range. So sit down with the lender or talk to the lender and figure out what range you’re looking at that is going to be a comfortable monthly amount.
Tip number two, and you may have heard of this before as well, but writing a letter to the seller of the property. What I have seen done and what I’ve had clients do is before you even start looking, just write a form letter, include a couple pictures of yourself, tell the seller about you. It goes a long way with the seller, if the seller is looking at seven different offers and one of them has a nice little letter explaining who the buyers are. If you’ve got kids, tell them about your kids. If you’ve got pets, tell
them about your pets. Anything that can just warm the seller up a little bit to get to know you a little bit better and realize that you’re not just numbers on a page, that you’re a human being. That letter to the seller can go really far.
Okay. tip number three, and this is where you need to get your agent involved. Have your agent, when you get to the point where you’re negotiating or where you’re submitting an offer on a home, have your agent get in touch with that listing agent and just find out from the sellers what’s going to work best for them. Find out what closing date they prefer. Find out if they want to keep their washer and dryer or their refrigerator, if they want to get rid of that. If you are really interested in a home warranty, find out if that’s something that they’re already offering or not. You’re going to want to keep the offer as clear and clean as possible and make it so that there are other things in the offer that are appealing to the seller besides just the price. Because sometimes it doesn’t always just come down to
the price, so have your agent get in touch with the listing agent and find out those logistics.
Find out what’s going to work best for the seller on all those things, and that way you’ve got one more thing in your offer that makes your offer just a little bit more appealing.
Tip number four, when you get to the point where you are writing an offer on a property, keep it simple. Don’t over-complicate it with all the bells and whistles that you want to throw in there. I had mentioned a home warranty. Sometimes it’s best just to leave that stuff out. If we feel like we want to
have a home warranty, we can ask for it later. Asking for closing costs: now might not be the time to do that, which goes back to step number one, making sure that your financing is in order from the beginning.
If I’ve got a seller that’s looking at two offers that are the same price, but one is asking for a $3,000 credit for closing costs, we’re probably not going to go with that offer. Especially if you’re in competition, it gives the seller the idea that you don’t have the money to close. So keep all those things
off. Keep the contract as clean and simple as it possibly can be. Offer the best possible price that you can without feeling like you’re overpaying and keep the rest of it clean and simple.
Tip number five, and I know this is going to be probably the hardest one. Don’t be in a hurry. There will be more houses. You will find yourself in competition on a house or two and you may lose a couple. And that’s okay, because every time you lose one, you learn a little bit and you learn more about what was really important to you and maybe what really wasn’t so important to you. And it might be a little different from when you started the whole journey on what you really thought you wanted.
So don’t be in a hurry. Take a deep breath. Houses will come on that you’ll fall in love with but the thing that’s really important to keep in mind is to not let yourself get so wrapped up in the frenzy of it all that you end up overpaying for that house. You don’t want to just start playing The Price Is Right where you just start throwing money at a house that six months later after you closed, you’re like, “Oh my God, I can’t believe we paid for this much for this house.”
So sit down with your agent and look at the comps. Look at what the house is really worth. In a competitive situation, you are going to pay list price or over, but don’t get so crazy with it that it’s just an obscene amount of money. You don’t want to do that. They will be more houses. That’s what I mean by just take it slow. If this one doesn’t work out, you submit your best offer. If it doesn’t work, it doesn’t work. There will be another house. They will keep coming and the next time maybe we’ll do things a little bit differently. But taking a deep breath and not making crazy fast decisions
is always going to be the best way to end up with what you really want. And in the end you’ll be happy that you, that you did take a deep breath in that you took it a little slower.
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