Buying A Home In A Sellers Market

Anyone could tell you that buying a home can, at times, be frustrating but recently, finding a home can be the most frustrating part of the process.  What can be attributed to this scarcity?  CNBC attributes these factors to the ongoing lack of supply.   

  • Current homeowners remaining in their homes longer.  For many reasons homeowners are reluctant to move.  They may not have enough equity to sell (leftover from the crisis), or they have a lower interest rate than what’s available now, or lack of inventory in the market they are looking in.
  • Homeowners and investors have rental properties that provide them income and with the current appreciation in home values there is even more reason to keep these properties.  Last year the share of single family homes and condos that were owned by investors reached 35%.
  • New home construction is at about 65% of the historic rate.  Builder’s state there is a lack of ready to build land as well as regulation costs and shortage of skilled labor which is hampering their comeback.

As a result some buyers have postponed their searching efforts but interest rates are still at historic lows and you may be in a better position with more purchasing power now.  Discouraged by the lack of supply and competitive nature of the market? Here’s some steps to help you prepare your strategy.

  • First, and I can’t stress this enough, speak with a lender and get a preapproval letter PRIOR to visiting homes.  Many buyers want to see homes before they speak with a lender and then are in a position where they love a home and want to put in an offer.  However, you could be competing with many buyers and timing is important.  While you wait for a bank or mortgage company to open the next morning another offer may be accepted.  
  • Unfortunately in a seller’s market you will have very little time to evaluate a property.  Sometimes just hours before you need to make a decision.  Preparation is the key.  Have a list of what you are looking for and check it off as you go.  Also, know your limits, what work are you willing to do to the property if any.
  • Be prepared to offer top dollar if you are in a competitive market.  If you are not willing to compete to get your house you will lose to other buyers. Period. You will also be setting yourself up for disappointment over and over.
  • Finally, if this type of market is just not your thing and you don’t want to compete against so many other buyers, you can wait until later in the year.  Late summer, early fall, even winter offer some great opportunities but keep an eye on the interest rates and get a new preapproval if your current one expires.

For more tips on buying a home check out my buyers information page and check out CNBC’s findings.