If you are trying to buy a home right now you have probably realized that competition is fierce! We experience this every spring but this year it is worse due to all the snow as we talked about in our blog THE IMPACT OF SNOWMAGGEDON delaying many homeowners from listing their homes. But it did not delay buyers from wanting to buy. Every winter buyers want to buy faster than sellers want to list. We described how this happens in our blog LISTING IN THE WINTER WILL GET YOU THE HIGHEST PRICE. Sellers delaying listing and buyers purchasing homes as soon as they come on the market is creating an extremely low inventory of homes for sale. As of Saturday March 21st there were 16,921 homes on the market in Massachusetts. This includes Single Families, Multi families and Condos. A year ago at the same time there were 19,512 homes for sale and that was low compared to prior years. Take a look at the graph below that shows housing inventory over the last four years:
Inventory is down almost 50% from where it was four years ago and buyer demand is up significantly! The good news is it will not stay like this forever and as we get into April and May more and more homes will come up for sale. If you see the house of your dreams between now and then you should take your best shot at it. Here are some proven tips to winning a bidding war:
Experienced Buyer’s Agent
One of the first steps you should take when buying a home is to hire an experienced buyer’s agent who can show you homes as soon as they go on the market. This way you can see the home as soon as possible and move fast if you want to make an offer. Your agent will also help you prepare for the home buying process and provide you with all the data and analysis you need to compare properties and arrive at the right price that works within your budget.
Have an Updated Pre-approval Letter in Hand
Have your pre-approval in hand even before you start looking, and have it updated every 30 days so you don’t miss out on getting the home you want. Make sure the amount you’re pre-approved for is the amount you’re offering on the home. If you want to make an offer on a home that is priced above what you’re pre-approved for, get it updated to match that amount. Getting pre-approved will make the mortgage application process smoother since you will have already spoken to a mortgage broker and gathered the documentation necessary for the loan. And if there are multiple offers on the home, having a recent, up-to-date pre-approval letter is a distinct advantage over a buyer who doesn’t.
Make it Personal
Writing a letter to the seller about why you are the best person to own the house may help to humanize the transaction. Sellers want someone to love the house as much as they did. Tell the seller why you love the home, why you would be the best owner for the home, and tell them a little about yourself so the seller can picture you as the owner. A home seller may connect with a buyer who expresses how much they love the neighborhood or will maintain the garden they planted. A personal letter may give you an added advantage when it comes time for the seller to accept an offer.
Keep Contingencies/Demands at a Minimum
A seller will often prefer a buyer who doesn’t put any contingencies in their offer, such as having to sell an existing home before they can purchase a new one, or having a home inspection done. Although we generally do recommend that buyers have a home inspection, in a competitive situation it can help not to. Keep your demands at a minimum as well. Too many back and forth negotiations about repairs or appliances may make the seller turn to another buyer. Only request what is necessary. If you must have contingences such as a home inspection, make sure the timelines for them are short.
Make Your First Offer Count
Speak with your buyer’s agent about what your first bid should be, and make sure it’s your best. You will often only get one chance to bid on a home, and an experienced agent will know the market and what the best offer will be for your budget. Don’t waste your time – or the seller’s time – with a lowball offer.
Above all be patient! Don’t get caught up with emotions when presenting your offer or take it personally if your offer is rejected. There are many factors in play during multiple offer situations, and you won’t always know all the reasons why a seller chose another buyer. Just stick with your original budget and strategy and the right home will be yours before you know it.