Buying a Home in a Low Inventory Market
When housing inventory is low (like now during the pandemic) buying a home can be challenging and competitive. Many times, high demand and low inventory leads to multiple offers and stressful situations for both buyers and sellers. A few things to prepare to give yourself the best chance to win:
- Get Pre-approved. An important first step no matter what market conditions, but even more crucial in tight inventory situations so you can act fast. Pre-approval will help you to understand what you can comfortably afford. Far too often people wait on this step, but even if you don’t plan to buy for 6, 12, or 18 months talk to a lender NOW. Keep in mind, your current income, rent payment or mortgage does not necessarily translate to what you can afford in your next purchase. Let a qualified professional help you. If you need a recommendation, please reach out to me for trusted contacts.
- Know What You Want. Unless you are very wealthy, and in that case this article probably doesn’t pertain to you, you have to be realistic in your search. Sit down with yourself, spouse or partner and list everything you want in a perfect world. Then, narrow down your top five. Hopefully, these top priorities are achievable. You will feel more confident if your needs are concise and you walk into a home that checks all your boxes.
- Don’t Be Afraid. Remember making an offer is just that, an offer (not binding) so don’t be afraid to take the leap. If priced fairly to the market, a property will likely go fast, so don’t hesitate to make a strong initial offer. Also, if you make the first offer this helps your odds. Sellers generally subconsciously favor the first offer they receive. There is an old adage that we start low and negotiate to the price that is agreeable by both parties, but when it’s a seller’s market and others are interested you may not have that luxury. Buying a home for the asking price if it is fairly priced is not overpaying.
- It Is Not Always About Price. In a lot of situations price is a main factor, but there are other elements to consider. Closing date, inspection periods, mortgage contingencies, earnest money amounts, etc. Sellers have their next moves to think about and other variables which determine who they choose to work with. It is important to consider the entire picture in the negotiation process. Stay open minded and flexible if possible.
- No Regrets. Sometimes you need to walk away if the deal just doesn’t suit you. You will find another home you like—move forward. However, you also do not want to miss out on a property you love over an insignificant difference in monthly payment or terms which can still be negotiated. Again, a place where a professional lender and I can help you to determine when it’s time to walk.
Buying real estate can often be a long, stressful process filled with emotions. Homes play such an important role in our family lives and memories. I get it! This is why I look at my role to be a trusted advisor presenting you with all the facts to guide you to make the best decision possible. Please reach out with any questions or ways I can help.