Almost purely a matter of economics, a seller’s market is one in which inventory is low and demand is high so that homes sell quickly and bidding wars are common. And that describes most markets across the country right now. It is, of course, great for sellers, but presents some definite challenges for buyers. But, although more difficult, it is still possible to buy a home that meets your needs in this kind of market. To help you out, we offer these 5 tips for buying a New Jersey house in a seller’s market.
1. Start Early and Do Some Research
It’s a good idea to start early in order to get a sense of the exact nature of the seller’s market in the area where you want to buy. It just takes a little research and legwork.
“Spend some time looking at what’s available before you get serious. Walk around potential neighborhoods on the weekend, and scan your favorite real estate website for new listings. Take note of how long homes are listed before a contract is pending. (In an especially hot market, it won’t be long.) You might also want to look at recently sold listings online to get a sense of how much homes are really going for compared to their listing prices.”
The idea here is to get a feel for just how hot the local market is “without the pressure of feeling like you need to make an offer.” It will also provide you the opportunity to discover more about the kinds of homes and the neighborhoods that meet (or don’t meet) your needs. You will simply be in a better position when you go into a transaction prepared and knowing what to expect.
Your New Jersey agent can also provide valuable assistance during this early preparatory stage. To discover more, just call 855-966-DEAL.
2. Be Prepared to Compromise
Certainly, you want a house that ticks all your must-have boxes and as many of your like-to-have boxes as possible. But in a New Jersey seller’s market, you still have to be prepared to compromise in some areas.
According to industry experts, “[h]olding out for ‘the one’ may not be an option in a hot market. It may be smarter to approach home shopping by thinking about ways you could make a ‘good enough home’ work.”
If you can remain flexible in your wants and expectations, you simply have more options in a seller’s market. So give some serious thought to what is most important to you – what you have to have and what you can compromise on. Maybe, for example, you really can get by without that third bedroom to convert into a home office.
3. Get Pre-Approved and Have Proof of Funds
Remember, too, that in a seller’s market homes sell fast and you’ll likely be bidding against other (perhaps several) buyers. So you must have ready to hand those documents that prove you’re a serious buyer – that is, your pre-approval letter and proof of funds to cover the down payment.
When you enter into a multiple-offer situation, speed and proof of ability pay are often crucial. You may only a day or two submit an offer after viewing a house. Getting pre-approved and having your pre-approval letter to show that you can actually get the financing, as well as having proof that you make the down payment, can expedite matters.
4. Make Your Offer More Attractive
As we’ve indicated, in a hot seller’s market multiple offers are the norm. You need, then, to do something to make your offer more attractive than the others. Waiving or severely restricting contingencies is an effective way to do it, but there are more and other things you can do.
“Aside from waiving contingencies, there are other ways you can make your offer more enticing to sellers. Introducing the possibility of a rent-back agreement or setting out a closing timeline that will work well for the sellers can help.”
You could also consider including an escalation clause. “That means you’ll automatically outbid any offer by a given amount (say $1,000) up to a certain point. . . . [H]owever, that these can backfire. An escalation clause is like playing poker with your cards face-up on the table . . . Seeing the total amount you’re willing to pay can make sellers wonder why you aren’t offering that amount in the first place.”
Be sure, then, before deploying any of these deal-sweetening tactics, to consult your New Jersey agent at 855-966-DEAL.
5. Find a Good Local Agent
Buying a New Jersey house in a seller’s market almost demands that you find and use a good local agent.
“Having a good buyer’s agent is particularly important in a hot market. You want someone who’ll alert you to listings as soon as they hit the market, if not before. Also, a good agent will know how to make your offer stand out. . . . [I]n a market like this, there is no margin for error.”
To avoid error and meet the challenges of buying a New Jersey house in a seller’s market, contact us today at 855-966-DEAL.