According to the national Association of Realtors (NAR), sales of existing homes rose by 9% in 2015 over the previous year. Economist Lawrence Yun attributes this to pent-up demand from homeowners who have now regained enough equity to buy into a new house, or “trade up” from their current one.
As a result, home prices rose 4% in 2015 across the U.S., and are expected to rise another 3% in 2016, according to Kiplinger and Clear Capital, a real estate data firm.
So what does this all mean? It means we are in the midst of a “seller’s market.” In other words, the market is hot—and houses are selling super-fast—so it will be tougher to lock down the house you want, once you find it.
But don’t despair. Here are 4 simple tips to help you buy the right home in a seller’s market.
Tip #1—Get preapproved for your mortgage.
Make sure you’re ready to buy before you even tour the house. Since it takes at least 1-2 days to get approved by a lender, you don’t want to lose the house you love in a fast-paced market. (For more lending tips, check out HomeServices Lending.)
Tip #2—See new listings as soon as possible.
Ask your realtor to alert you of new listings the same day they open. Be prepared to visit homes as soon as they list. Many houses in a seller’s market will sell on day 1, so you don’t want to wait till tomorrow.
Tip #3—Be prepared to offer more money.
If multiple buyers are bidding on the same house, it’s very likely that you will get into a “bidding war.” You may want to offer more than the price of the home upfront to avoid a bidding war or secure the best possible chance of sealing the deal. (Your real estate agent can coach you on this.)
Tip #4—Be willing to work with imperfections.
Consider beforehand whether you would be willing to make renovations to a home that’s less-than-perfect—especially if it’s the right home in the right neighborhood. Would you paint a living room? Replace the landscaping? Redo the hardware on the kitchen cabinets? Know your limits before you buy.
Need a pre-approval in a hurry? Talk to HomeServices Lending, the affiliated mortgage company of ReeceNichols.