Buying A Home In A Competitive, Low Inventory Market

When the real estate market experiences a limited inventory of homes for sale, it's considered a seller's market, and competition is high. A competitive real estate market is great for the seller, but can be a challenging time when you're trying to buy a home. Lower inventory means it could be harder to find the perfect home, and when you do it requires quick action with a complete understanding of the exact market conditions as fast sales and bidding wars can be distinct possibility. Find your dream home without being overwhelmed with the help of an experienced real estate agent to guide you through the home buying process and provide invaluable home buying guidance.

Be Offer Ready

New listings in a seller's market, especially for move-in ready homes in great neighborhoods with exceptional schools, won't stay on the market long. You may only have a day or two to submit your offer, so you must be ready. Secure pre-approval for a mortgage and prepare supplemental paperwork that provides proof of funds for the down payment before you even begin home shopping. Pre-approval gives your offer merit and tells the seller you're serious about buying the home.

Anticipate Multiple Offers

Be prepared for multiple offers landing on the seller's doorstep, including offers over the asking price. Sellers are often enticed by a larger offer, but competing as a buyer in that situation can be a tricky endeavor and requires an experienced negotiator. It’s also important to consider that most lenders won't approve a mortgage for more than the appraised value of the home, which means the buyer must make up the difference in cash should the home appraise below the amount offered. If your offer is above your pre-approval amount make sure to discuss that possibility with your lender.

Be Flexible

When the real estate market experiences low inventory, it's not unusual for buyers to remove or reduce contingency periods to make their offers more competitive. It can be an advantage to be prepared to show flexibility that may include fewer demands and concessions.

Consider allowing the seller to choose the closing date, and while you typically shouldn't completely waive an inspection contingency, consider offering shorter contingency periods for appraisals, inspections, and financing, if you and your lender are comfortable with the deal. Shorter contingency periods often allow for a quicker closing, which could also give you the edge your offer needs to succeed. In situations that result in bidding competitions, one tool you can use is an escalation clause, which states you'll beat competing offers up to a predetermined maximum amount.

Write A Letter

Although there's no guarantee it will sway the seller, writing a concise, heartfelt letter stating why you fell in love with the seller's home could help. Flattery never hurts, and neither does appealing to the seller's emotions. Talk about how much your family would appreciate the seller's home. If your letter snags the seller's attention, it could give you an edge in a multi-offer situation, especially when a competitor submits an offer close in price and contingencies like yours. On the surface, home purchase offers can look similar, so set your offer apart with the human touch.

Hire A Top Real Estate Agent

When you're trying to buy a home in a competitive market, working with an experienced real estate agent can make all the difference in the world. Matt Dejanovich at Real Estate One in Ann Arbor, MI, has over 30 years of experience providing expert service to homebuyers in Ann Arbor and the surrounding communities. His knowledge of the local real estate market is a prime asset to home buyers in a seller's market. Contact Matt at 734-476-7100 and put his experience to work for you today.

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