How To Buy In a Hot Market and Not Get Burned

Mortgage rates are the lowest ever recorded, with some dipping below 3% and that has given consumers buying power that has somewhat balanced the hit they would be taking with home prices soaring as they are. Technically, it is a seller’s market, but for the first time in history, a case could be made for it being both a buyer’s and a seller’s market at the same time. Everyone wins!

The issue is the inventory. It is very low and so buyers are finding it difficult to take advantage of these low rates. So, how does a buyer navigate a market successfully when most properties are selling to multiple offers, often over the asking price, without getting burned by paying too much?

While the negotiations shift in a rising market goes from reducing the purchase price to beating the other offers, there are still parameters and measures I use to provide you with a reasonable price range for the property. There is nothing worse than, after the thrill of winning the bid, you realize you will likely lose your equity in the home when the market adjusts in a few months. Can the market continue to rise? Sure! But if it has gone up 30% in 6 months, there is a good chance that there will be an adjustment in the market.

Many sellers have experienced buyers backing out of contracts due to buyer’s remorse and are more consciously accepting reasonable offers. So there is hope for buyers with level heads, but with so many multiple offers, buyers need to be prepared. This means our having a frank talk about what is reasonable to expect in your price range, amenities that are very important to you and those that you simply want, but may be able to add later. Knowing your home when you see it allows you to move forward with an offer more quickly and, yes, the gold carpet can be replaced after close.

Being ready also means being pre-approved. Working with a local, reputable lender often gives buyers an edge over the competition because one of the biggest anxieties for sellers is the financing contingency. They take their property off the market for a month to six weeks waiting for the buyer’s loan approval, so knowing the lender is helpful.

Lastly, discussing with your lender in advance, what monthly installments you are comfortable paying and the amount of money you want to keep in reserve will help you feel more confident throughout the buying process.

So, speak with your lender, have a copy of your pre-approval available, get in quick and expect to place the offer immediately after the showing. Meanwhile, I will research the property, try to find the age of the systems and if there are any issues being disclosed, and provide you with a reasonable price range to consider. Together, we can take you home!