When buyers outnumber sellers, it’s important to be flexible and ready to move quickly when the right home comes along.
Navigating the home-buying process can be difficult in the best of times, but it can be especially stressful when you’ve planned and saved, only to see your favorite homes snatched up before you can even make an offer.
In the current landscape, especially here in the fastest growing destination city in the USA, Metro-Phoenix, there simply are more buyers than sellers, and homes are moving quickly — sometimes for more than the asking price due to high demand and market velocity.
If you’re able to make an all-cash offer, you’ve got an edge. But there are other winning strategies built on empathy, persistence, creativity and flexibility that also can get you over the threshold if you’re buying with a mortgage.
Zillow surveyed 376 Zillow Premier Agents in early spring about the strategies they used or encountered in their last three to five transactions as buyers’ and listing agents. While cash topped the list of effective strategies, less than half of the listing agents surveyed deemed it the most effective.
On average, over a six-month period, buyers’ agents on the panel said they submitted an average of four offers per client — and 13% submitted six or more.
To improve your chances of having an offer accepted in a competitive buyers market, you may need to act fast and think creatively. Here are seven ways you can prepare.
Important: Get pre-approved for a mortgage:
Buyers who are organized, well-prepared and ready to move when the right home comes along are in a better position to get the house of their dreams. What does this mean? Determine if there are any issues with your credit report, and make sure there are no outstanding bills or unpaid debts that can negatively affect your credit score.
If your finances are sound, start by getting a pre-approval letter from a reputable lender that you can show to agents and sellers. Don’t know who to call? I have several that can fit any scenario that you have! A pre-approval letter is typically good for 90 days and shows sellers that you are a motivated, credit-worthy buyer who is able to act fast.
In a competitive market, sellers will likely have multiple offers to choose from and will look for a buyer who is able to close on the sale. The price on the offer is a huge factor, but the terms and conditions you offer — including the ability to close quickly or be flexible around the closing date — can be as important. Showing that you can pay for the home puts you on equal footing with other buyers and allows your offer to stand out in other ways.
Let’s make a ‘clean’ offer:
The most compelling offers are flexible enough to meet the seller’s needs. For example, offer a quicker escrow for a seller who needs one or give them more time if they’re still hunting for a new home themselves. You also can close quickly and allow them to rent back the home for a specific period, but be sure to do your research on the pros and cons of this arrangement first.
When scheduling inspections, try to get an appointment soon after your offer is accepted, or schedule a pre-inspection before you submit an offer. That way, you can remove your inspection contingency more quickly if you’re comfortable with its findings.
Ask your lender to pre-schedule an appraisal when you make the offer, or at least check when an appraisal will be available to assure the seller of the timing. No seller wants to accept an offer that falls through two or three weeks later if the home’s value in the appraisal is lower than the asking price. Swift timetables help ensure that your needs are met while assuring the seller that the sale will go smoothly.
Use remote tools to stay a step ahead:
In a strong market, it’s not only common for a home to receive multiple offers before the first open house, but possible for a home to go from listed to pending in under a week. In April 2021, 47% of U.S. homes were on the market for less than a week before going pending, which is why waiting to see a home in person could mean losing out on the opportunity to buy it.
Explore homes ahead of time through virtual tours, or, ask for my assistance with a Facetime tour! I love it! This allows you to focus on the homes you’re most interested in and move fast on a home you love. Remote home tours can be done on your smartphone — and some agents even make live walkthroughs available through video chat.
If you’re ready to act, do so as quickly as you can. Some sellers set a deadline for reviewing offers, but there’s no reason you can’t submit earlier and every reason you should if you have a strong offer. About a quarter of agents in a Zillow survey said they always submitted offers before the deadline.
Work with an experienced local agent – Like ME:
An experienced agent who understands the local market can mean the difference between getting your offer accepted quickly or spending months unsuccessfully writing offers. Want to live in a particular neighborhood? Chances are, I know the area and many agents that are working in that market. When agents know one another, they know who can get offers though the process with ease and what might be a little on the risky side. This happens in all lines of work – have you ever had a job where everyone achieves at the exact same level? Exactly.
A good listing agent who is looking after their client’s interest wants to be as certain as possible that a deal will go through to closing. One way to provide this certainty is to steer their client toward a buyer whose agent is well-known, respected and can get the deal done.
Present yourself in the best possible light:
Your offer should look professional. Ideally, it should be typed with a pre-approval letter from your bank or broker attached to the offer. If there are disclosures presented to you prior to your making an offer, sign off on them. Make it clear to the seller that you’re serious, motivated and ready to move ahead should they choose to work with you.
Plan ahead for a bidding war:
Your best strategy for competing in a hot market is to prepare a plan that allows you to act quickly. For some buyers, that means including an escalation clause that signals to a seller that you’re willing to put in a better offer should a competitor top your original bid. If you decide to include such a clause, be mindful that a home already priced at the high end of your budget could push you to pay more than you intended.
When you’re competing against cash buyers for a home you love and plan on staying in for a long time, consider whether to offer more than the asking price. Cash buyers are counting on a seller’s desire for a sure sale that won’t fall through because of financing issues, and they sometimes expect a discount for what amounts to a guaranteed sale. Doing the math can help you determine whether you can bump up your offer and how doing so would affect your monthly payment.
Know your bottom line — and prepare to make trade-offs:
Staying within budget in a competitive market can be a test of will, especially when you need to act fast. To avoid paying more than you can afford for a house that seems to check all of the boxes, review your must-have list ahead of time and identify what is non-negotiable and where you’re willing to be flexible. Remember to factor any home improvement needs into your budget, and figure out what can’t wait and what projects you can save for down the road.
For further guidance on succeeding in a sellers market, there are 9 tips for buyers and advice from a mental health expert on coping with the inevitable stress that comes with buying a house in this kind of market.
Near record-low mortgage rates and the freedom to telecommute means home buyers can explore new, and potentially more affordable, areas to live. But right now, nationwide, homes are selling at their fastest pace across all price ranges. Here are nine tips for buyers looking to score their dream home.
Make sure your credit score is good.
A better credit score can mean a difference of tens of thousands of dollars over the life of a mortgage. Have a game plan to clean up your credit score if needed, before starting the pre-approval process. You may discover it’s better for you to wait to buy until you can improve your score.
Shop around for a mortgage. It can mean a difference of several hundred dollars a month. Talk to different lenders to ensure you get the lowest possible rate, and ask questions about the interest rate, down payment amount, and estimated closing costs, among others. Zillow has a network for mortgage2 lenders to consider.
Get pre-approved so you can move fast.
Pre-approval means you are approved for full financing and requires a more comprehensive finance and credit check, which differs from pre-qualification which is good for shoppers still figuring out what they can afford.
Transfer gift or loan money into your bank account, now. Zillow’s 2020 survey of consumers shows that 40% of buyers with a mortgage and 52% of first-time homebuyers receive loans or gifts from family and/or friends to help with the down payment. Ready-access to that cash factors into your pre-qualification.
Factor closing costs into your budget. This is what you pay beyond the down payment, and may include taxes, appraisal fees and homeowners insurance, among others. Preparing for these can limit stress after your home purchase, especially if your offer was at — or over — your budget.
Write down tradeoffs you’re willing to make ahead of time. Heading into a potential bidding war, it’s prudent to have a clear list of priorities as well as house features that you can live without so that you stay within your budget.
Narrow your options fast with virtual tours.
Homes in a hot sellers market can go under contract in about two weeks. And 12% of homebuyers say they would be willing to purchase a home sight-unseen. Get the speed edge over other buyers by previewing homes using virtual or 3D home tours, and take advantage of self-tour options when available.
Consider an escalation clause in your offer. This is language in your pre-approval letter that ensures your best offer is always in front of the seller. The downside to an escalation clause is you might pay more than you originally intended. To avoid going over budget, shop for homes that are below your maximum price point.
Hire me to assist you as I have extensive local market knowledge. I can help you understand what makes a winning offer in your area.
Reach out today! I’m always here to help and NEVER too busy for referrals! Christy Crouse