Today’s real estate market is as competitive as ever. In my nearly 20 years in this business, this is one of the most difficult markets I have ever seen for home buyers. Frustration levels are up and disappointment is high as offer after offer falls short.

In this blog post I share 5 tips for buying a home in today’s market that will put you in the best position to have success in your home search. Watch the following video, or continue reading below, to learn more.

We are currently in the midst of one of the strongest seller’s markets I have ever seen. Chances are the majority of homes you view are going to sell quickly, receive multiple offers, and experience a bidding war. Standing out as a buyer is absolutely critical if you want to get your offer accepted. With that in mind, here are 5 tips to put yourself in the absolute best position to submit the winning offer.

1) Know Your Budget

Knowing your budget and what you can afford is critical to your success as a homebuyer. Online loan calculators are a great place to start, but won’t provide the level of accuracy you need in today’s market. The best way to work on your budget is with a trusted lender through the pre-approval process. Your lender will not only help you determine the purchase price of the home you can buy but also consider HOA payments, insurance, and other expenses to make sure you are comfortable with the total monthly obligation.

In addition to reviewing the total monthly expenses, your lender will also review the total cash needed to close including any amounts needed for reserves. Considering many homes are selling for over list price currently there could also be funds required to cover any potential shortfall between the contract price and appraised value.

Working with a lender upfront will give you the confidence you need to know exactly what your best offer can be when you find the perfect home.

Additionally, as Freddie Mac states;

“The pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.”

2) Be Prepared to Act Fast

It can be very difficult, especially if you're a first-time homebuyer, to realize just how quickly properties are selling today. According to the National Association of Realtors (NAR), homes are selling in an average of just 17 days. That matches the average days on market here in Frisco as well, but that doesn’t mean it is taking 17 days to receive an offer. Locally, when an offer is accepted the home goes into an Active Option Contract status. Even though the home might appear active on many popular websites, that status means there is an accepted offer and the buyer is currently within their inspection contingency period. A property doesn’t usually go off-market until the inspections are complete, the appraisal is received and the buyer’s loan is approved. For homes to be selling in 17 days on average that means they are usually receiving offers within the first 2 to 3 days.

If a home comes on the market on Monday, thinking you can wait until the following Saturday or Sunday to view it, then spend some time thinking about it, it's too late. The home is already going to be under contract. As such, it's really important to move fast which is difficult considering it’s not a pair of jeans you’re buying. It's stressful enough being such a large financial investment without the added pressure of having to make a quick decision, which brings us to tip number 3 on why you should have a good guide helping you.

3) A Local Real Estate Professional Can Help Guide the Way

A local real estate professional that understands current market conditions and has insights into what’s worked for other buyers can be instrumental in helping you navigate the current housing market.

As Freddie Mac says:

“The success of your homebuying journey largely depends on the company you keep….be sure to select experienced, trusted professionals who will help you make informed decisions and avoid any pitfalls.”

I admit, not all agents are created equal. Make sure you are working with someone that has taken the time to understand your goals and needs and is looking out for your best interests, not theirs. The advice and guidance they will provide will be invaluable, and best of all, in most cases, their services are free to you as a buyer.

4) Craft a Strong, Fair Offer

In a “normal” housing market when you find a house you’re interested in and want to submit an offer, you work with your agent to determine the current market value of the property by comparing the list price to the most recent sales, come up with a price, then submit an offer somewhere at, or just below, the list price to start negotiations with the seller.

All of that is out the window in the current market. The market value of a home relies less on recent sales and more on whatever another buyer is willing to pay for the home, which often depends on their level of desperation. We've seen buyers offer $40,000, $50,000, $60,000, and $70,000 over the list price and still not be the winning offer. That's the reality of the conditions we currently find ourselves in.

There needs to be a balance between submitting an offer that has a chance of being accepted and not totally overpaying for a property. Your agent should work with you to help understand the true market value of the home, recent sales trends in the area, and current buyer demand. These factors will help you know the likelihood of where appraised value is likely to be and make sure that any offer you submit still works with the budget you created with the help of your lending partner in tip 1.

5) Understand the Seller’s Needs and Don’t Waive all Contingencies

When drafting an offer it's really important to NOT use the same terms on each one. That’s a bit like throwing spaghetti against the wall hoping something will stick. While many offers will be very similar, it’s important that your agent reach out to the listing agent in advance to find out if there's anything specific the seller is looking for. Some sellers need a slightly longer escrow period or a delayed closing date. Others need to close within 30 days but might need to stay in the home for an extra 2 weeks, 30 days, or even 45 days until they can close on their new home. Being flexible with some of those terms can put you ahead of the competition when submitting offers. You’d be surprised how infrequently agents reach out to find out what’s important to the seller.

Whilst you may have to stretch your budget and pay over the appraised value for the perfect home, I would caution you against waiving all contingencies, especially related to inspections. You never know what you might find that wasn’t readily visible from walking through the home. The last thing you want is to move into a home and learn that the roof or furnace needs replacing, or damage from a previous water leak wasn’t repaired properly. Those items could end up costing you tens of thousands of dollars in repairs you weren’t planning on or budgeted for.

Even if you reduce the number of days for an inspection contingency, I still highly recommend you keep it in there and give yourself the opportunity to cancel if something major, or unexpected, is found.

Freddie Mac explains:

“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line

Today’s competitive housing market makes it more important than ever to make a strong offer on a home. Hopefully, these 5 tips help provide you some guidance on how to be successful in today’s market.

If you have any additional questions or want to know if now is a good time for you to consider buying a home, please schedule a call with me now. It’s always free with no obligation.