When you’re out searching for a home, and the market favors sellers, you need a different kind of plan in place to avoid making mistakes. The real estate market fluctuates often, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. Especially if you’re shopping for real estate in Phoenix, AZ, or another market that currently favors sellers, you need to know some tricks of the trade to help ensure you don’t make any mistakes.
Believe me, buyers in a seller’s market can get what they want, but they need to bring their “A” game, and one thing’s for sure: buying a house in a hot market isn’t for the indecisive. Here are six common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market. It’s happening right now in Metro-Phoenix.
1. Not making your best offer
The desire to buy what we want for as little money as possible is practically in our DNA. So when most people see the listing price of a home, they naturally wonder what they can really get the house for. Offering lower than asking price is a perfectly reasonable strategy in some instances, such as if the house is overpriced compared with other similar homes in the area, or if it’s a buyer’s market with lots of available inventory. But trying to get a “deal” when you’re in a seller’s market might not be the best idea. In a seller’s market, many buyers do not step up with a strong enough offer. There is usually a shortage of inventory, and the competition is usually fierce. I’ve been at this a long time and my advice is to always encourage a buyer to come in with their strongest opening offer.
2. Waiting too long to put in an offer
Just as impulse-buying a home is risky, analyzing a home purchase to death in a seller’s market is inadvisable too. When you wait too long, you remain at “high risk” of losing [the home] you have fallen in love with. Once you’ve determined the type of home you want, the location you desire, and your price range, and finally find a home that meets your qualifications, submit a strong offer. To give yourself more leverage, be prepared to make a quick offer by having your finances in order — get a preapproval right away. Know how much you can afford, repair any credit issues, have your down payment in hand, and delay any [other] major purchases.
3. Not working with a seasoned agent
In a seller’s market, it benefits buyers to get all the help they can. If you have a seasoned agent on your side, you’ll probably have a better chance of getting the home you want. Plus, in most cases, buyers don’t pay real estate agents; the sellers do. When you’re competing against other buyers in a fast-paced market, it is vital to be ‘offer-ready. Working with a real estate professional saves tons of time and stress, as I know the ins and outs of the process and can provide tremendous insight regarding upcoming inventory.
4. Not being (preapproved) for a loan
You might know that you’ll be approved for a mortgage loan based on your steady income, your low debt-to-income ratio, and your high credit score — but the seller doesn’t know that. The only way to prove to the seller that you’re a qualified buyer is to be prequalified from a lender. Prequalification is absolutely paramount. A buyer has zero advantage if they do not have the cash to purchase without a mortgage and haven’t taken the time to speak with a lender. Not getting prequalified sends a message to the seller that the buyer will lag on getting their ducks in order and aren’t taking their house hunting seriously at all. Preapproval is a step above prequalification (where you simply tell your lender your financial story). The preapproval process involves submitting a mortgage application, complete with supplying verifying documents. Preapproval from a reputable lender is key. Presenting this shows the seller that the buyer has already set the wheels in motion and is serious about making [the deal] a reality.
5. Not being prepared for a bidding war
If there is ever a time when a bidding war could be imminent, it’s during a seller’s market. No buyer wants to be involved in such a battle for fear of possibly going over budget. But I suggest to you a solution for buyers: Set your search below your max budget to leave room in case of an over-asking bidding war. You might get the home for less than what you were really actually willing to pay in your mind as well.
6. Not learning from your mistakes
There’s no shame in learning that your offer has been declined, but it’s easy to get frustrated if your offers are declined over and over again. Learn from your last transaction(s) so you can get what you want. I always say that buying a house, particularly for first-time buyers, is a lot like dating. You probably have to let a few keepers slip through your fingers, have a couple sleepless nights over it, and then come back with serious intent to lock up the next greatest opportunity of a lifetime that’s right in front of you.
I’m so pleased to be assisting so many wonderful families in the East Valley. Things are seriously heating up in our competitive market and now more than ever, you need an experienced agent to help guide you past the goal line and make sure you come in first, by many lengths! Give me a call and let’s set up a 2-minute discovery meeting today so I can learn all about your wish list, objectives and together, we’ll take care of them all! – That Joannie (www.thatjoannie.com)