Buying In A Hot Seller’s Market.
February 4, 2021 | Buying
Buying a home is an exciting time. Be it your first home, your fifth move, or an addition to your real estate portfolio. Buying during a seller’s market however, can feel like an intimidating feat. Not to worry, we have some tips to help you navigate your way through the craziness.
What is a Seller’s Market?
In plain terms, a seller’s market is a market that favours sellers over buyers. Real estate moves with supply and demand. If the demand for homes is high ( lots of active buyers) but the supply of homes is low (number of homes on the market), the sellers have the upper hand. This is how a seller’s market comes about and we find ourselves in the midst of bidding wars, increasing home prices and often, defeated buyers.
Getting Prepared to House Hunt.
When looking to purchase the pre-hunting prep is always an important step, in a hot seller’s market, this preparation is even more important. In a hot market, things happen quickly. You do not want to put yourself in a position where you are making a hasty move with unknowns in the air.
- Get your mortgage pre approval BEFORE you start looking. This is a must for any buyer. Knowing what you can afford before you start looking ensures you are looking within your budget, and that you know what you can offer. When in a seller’s market and bidding wars are commonplace, going in with a firm offer (no conditions) can be the winning piece of your offer. If you are confident in your financing before offering on a home, you can eliminate the financing condition, strengthening your offer.
- Go through the market’s current climate with your Realtor. Anyone can hop on realtor.ca and see what homes are listed for. Those prices only tell half the story, particularly in a hot market. While a home may be listed at $450,000, your agent may know that homes of that price point in the neighbourhood you are looking, are currently selling for an average of $60,000 over asking due to multiple offers. This will save you from making lost cause offers and getting beat up by the market.
- Set a Budget / purchase plan and stick to it. When you get into multiple offers on a home you love, things get competitive. You don’t want to get caught up in the moment and later feel as though you grossly overpaid and have to deal with the budgetary consequences of being “housepoor”. If you’re investing, know what purchase price will allow you to see the return you need, and don’t push that. If you’re purchasing your family home, know your ideal purchase price and your max offer before you get into the offer. Your agent will guide you through the process, knowing based on the property and number of offers, what numbers should do the trick.
Managing Expectations.
Know what you’re in for before you start shopping, knowledge will allow you to enter a seller’s market with confidence and optimism.
- Know that you will run into multiple offers. That is a given in a hot market, but it doesn’t have to be scary. If you stick to a plan and a strategy, and trust your agents guidance, someone has to win- why can’t it be you.
- You probably aren’t grabbing anything for a “steal”. Low ball offers are not going to fly 9.5/10 times in a Seller’s market. We all want a good deal, but don’t lose your dream home over a $2000 discount.
- You may not get the first house you offer on… or the second. If you start the process, with this in mind, it will help you to manage disappointment if you get out bid. This is a reality of a Seller’s market, and denying it will only stifle your house hunting.
Trust The Process.
Searching for a home is an exciting journey, trust that the right home for you is out there and that every rejected offer, is a step toward where you’re meant to be.
