Last week we explored whether you’re in a Buyer’s or Seller’s Market when it comes to real estate, what it really means, and if it even matters. I’ll link to last week’s video here, in case you missed it. It may help to put things into context for this week’s post.
This week I’m taking a more focused approach and sharing tips for buying a house when you’re in a seller’s market, and tips for buying a house when you’re in a buyer’s market.
Your approach to purchasing a home can and SHOULD change depending on the current state of the market, so let’s talk about what you can do.
If this is your first time here, welcome! If you’ve been here before, thank you so much for spending your time with me. My name is Lindsay and I‘m a proud Anthem resident and your local REALTOR® with the Wise Move AZ Team at Realty ONE Group. On our YouTube channel and blog we have a lot of fun talking about all things Anthem and real estate every single Thursday, and we absolutely love having you along for the ride.
The Good or The Bad?
Alright, do you want the good news or the bad news first? Just kidding! As I discussed in last week’s video, I don’t know that there’s a lot of value in the average consumer trying to time the market. It’s really about making the most of the current market and playing to the strength of your position in it.
So, my plan is to start with my tips for buying a home in a seller’s market, because that usually the more common question, but after that I am going to jump straight into my tips for buying in a buyer’s market. Although it may be less asked about, I feel strongly that it’s equally important.
Tips for Buying in a Seller’s Market
As a quick reminder, a seller’s market is a market that tends to favor sellers. Prices may be increasing, homes may be selling quicker, there may be fewer homes on the market, and you may be seeing more multiple offer situations. Ouch!
Tip #1: Be Ready to Act Quickly
Get your Finances in Order
Please don’t hear this as me saying “buy the first house you see”. No way! Instead what I want you to consider is getting your finances in order. If you’re fortunate enough to be paying cash for a property, ensure those funds are easily liquidated. If you’re like most people, and you’ll be getting a loan, get pre-qualified, or better yet, consider getting fully pre-approved for your loan. I’m a HUGE advocate for using a local lender. They’ll fully understand the local requirements and will be ready to deliver what you need, when you need it. In Arizona, we’re required to submit Proof of Funds or a Pre-Qualification form with your offer. If we have that upfront, we won’t be frantically trying to get it together when you find a home you want to make an offer on.
Monitor the Market Closely
Additionally, when I say be ready to act quickly, I also mean that you’ll have to monitor new listing closely. If a home you like hits the market, you may need to be willing to make time to see it that day. If you’re house hunting from afar you may need to rely on your REALTOR® to preview the home for you. If you have questions about what that would look like, you can click and watch this video on Virtual Housing Hunting. It’s possible that depending on how competitive the market is and your availability to see homes, that you may need to make an offer sight-unseen.
Anyways, the key here is that hesitating or being unprepared could cause you to miss out on a home, so work with your agent to get as prepared as possible in advance and come up with a plan for springing into action when new homes hit the market.
Tip #2: Learn about the Seller
When you find a home that you want to make an offer on, work with your agent to learn as much about the Seller as you can. Remember, you could be competing against several other buyers for this house and you want your offer to stand out in all the best possible ways!
Of course offering the list price or more is going to appeal to them, but there’s so much more to an offer.
Is there a closing timeline that works best for them?
Could they use a little flexibility from their buyer in one area or another?
Would the ability to leave some furniture behind make their lives easier?
Is this Seller emotionally attached to this home?
Most of the time the answer is yes. If that’s the case consider writing a letter to the Seller. Let them know what you love most about their home, maybe share a little about your own story, and share your hope of one day calling it home too.
Lastly, you want to know if there are already other offers on the table. If so, find out as much as you can about them so that you can draft yours accordingly. Their agent may not have the Seller’s permission to disclose, but it is always worth an ask.
Tip #3: Make a Strong Offer
This is not usually the best time or place to be hunting for a ‘deal’, unfortunately. You should plan to pay a fair price for the home, and you may need to be prepared for the price to go above asking. Don’t hear that as me saying that you need to go in above asking. I’m not. What I’m saying is think about what your best or strongest offer is and consider going in at or close to that. Bring your ‘A-Game’ and be proud of the offer you’re submitting.
If you go in too low your offer may be leveraged against other possible buyers or even outright ignored. On the other hand, if you go in strong, and lose out on the house, you’ll know that you did your best.
Tip #4: Have the Tough Conversations Before
This kind of speaks to the first tip of being prepared, but I want you to go a little bit further once you’ve identified a home that you want to make an offer on. Things can move quickly and you can find yourself in a multiple offer or multiple counter offer situation just like that! It’s so important that you’ve had the tough conversations beforehand, so that you don’t get swept up or taken advantage of when the negotiations get hard. The last thing we want is for you to have buyer’s remorse because you feel like the seller “won”.
Answer these questions:
What is the highest you’ll go on price?
What contingencies, if any, are you willing to remove or renegotiate?
What are your ‘must haves’ versus ‘wants’? Know where you’re willing to settle.
What if the Seller refuses to make repairs?
What terms of the contract will you entertain push back from the Seller on and which ones are you firm on?
You can talk to your agent about these questions or you can keep them to yourself, just do what you can to be prepared.
Tip #5: Don’t Get Discouraged
Being a buyer in a seller’s market can be so disheartening if you lose out on a property you really wanted. We completely understand, we ride that roller coaster with our clients.
If you need to take a break after losing out on a house, take it. If you want to jump back in a make an offer on another home, do it. This is your journey and your personal circumstances will dictate your next steps. Do what makes the most sense for you, when it makes the most sense for you.
Okay, that last one was a little touchy feely, but that’s okay! Now, let’s talk about:
Buying in a Buyer’s Market
As a quick reminder, a Buyer’s market is a market that tends to favor buyers. Prices may be decreasing, homes may be selling slower, and there may be more homes on the market. Generally there are fewer buyer’s fighting over the same house. It’s got to be all sunshine and roses, right?!
Ehhh, not quite! But it definitely is less frantic!
Tip #1: Take your Time
Shopping for a house is so exciting and you might be tempted to just jump right in and buy the first one you like. Pump the brakes! In a buyer’s market you may have more flexibility, so my advice is to take some time to really get familiar with what’s out there. Know the inventory and really reflect on your wants versus needs. It’s possible that you may be able to snag more of those wants if you’re in a buyer’s market. Unless, you know, your wants are a five car garage, fully renovated, pool home, in Anthem under $300,000… because… same! Aaand it doesn’t exist.
Anyways, I don’t want you to miss out on your dream home, but I also don’t want you to be too hasty.
Tip #2: Be Careful with Low-Ball Offers
Don’t assume that because you’re in a buyer’s market you can just make super low-ball offers and ‘meet in the middle’. Seller’s may be offended by your offer and not be willing to respond. Just because the market isn’t in their favor, doesn’t mean they’re just going to give away their house. I know, I know, tough times.
My best advice is to rely on your agent to run thorough and complete comps on the property you want to make an offer on. You can be a little more aggressive with your initial offer, but I encourage you to still be in the realm of fair or reasonable.
It’s still possible for a home to have a bidding war in a buyer’s market, particularly if it stands out in some way or it’s priced really well.
Tip #3: Still Get Pre-Qualified
Okay, are you sick of me harping on your financial situation?! Even if you’re in a Buyer’s market you want to make sure you have proof of funds, a pre-qualification, or a pre-approval in place. The Seller still needs to know that you’re serious and capable of purchasing their home. They need to know that you’re worth taking their home off the market for.
Tip #4: Shorten Response Deadlines
When you’re in a buyer’s market you may want to tighten up the period you give a seller to respond to your offer. In our market, I would say 24 hours is pretty typical, so you could consider giving them half a day if you wanted to tighten that up, for example.
Now, I want to preface this by saying that your agent needs to make sure that the Seller and Seller’s agent can accommodate the tight turn around time. You don’t want to make an offer with a short response time just to find out that the Seller is hiking Machu Picchu until Tuesday without internet access, just saying. Do your due diligence. Also, if you’re submitting the offer at 8:00 at night, maybe consider giving them longer than 8:00 in the morning to respond. Be reasonable! The key here is that you want to limit the time they may have to ‘shop’ your offer around to other buyers that have some level of interest. Get in and get out!
Tip #5: Ask for what you want
When you’re crafting your offer, think about what you really want.
Would a longer closer be helpful for you?
Is there a piece of furniture or artwork at the house that you would love to have?
Could you use some help with closing costs?
Maybe you want to ask for a few more repairs or even a carpet allowance if the floors were looking dingy?
Anyways, I’m not suggesting that you go all out here, but if there are a couple of things that would really make you happy, consider asking for them. If the Seller hasn’t been getting the activity they were hoping for, they may be more willing to negotiate.
So, there you have it! What do you think? Are you ready to buy with confidence regardless of the status of the market? As I mentioned in our previous video, I bought my first house in a Seller’s market and it was still a great investment. Next week we will be tackling our best tips for selling, so make sure you check back in on Thursday afternoon.
Also, in case you missed it, you can click here to watch our video on Buyer’s and Seller’s Markets and whether it really matters, or click here to get to know more about our the community I’m so proud to live, work and play in – Anthem, Arizona.
Enjoy those and I’ll see YOU next Thursday!
