Buying a home in an extreme seller’s market can be incredibly challenging. With inventory levels low and competition high, it's not uncommon to find yourself in a bidding war with other buyers. While this situation may seem daunting, there are strategies you can use to increase your chances of success when buying a home in an extreme seller’s market. In this blog post, we'll discuss how to successfully buy a home in an extreme seller’s market by providing tips on competitive bidding war strategy and more.
Strategies to Win a Bidding War in an Extreme Seller's Market
As inventory levels decrease and demand for homes rises, it's not uncommon to find yourself in a bidding war with other buyers when trying to purchase a home in an extreme seller's market. But with a few savvy strategies in your arsenal, you can increase your chances of success.
1. Get pre-approved for a mortgage
Before you begin your home search, ensure that you have a pre-approved mortgage. This gives you a competitive advantage over other buyers without pre-approved financing. It shows the seller that you are a serious buyer, and that your financing is likely to be approved. In fact, some lenders will also underwrite your loan without having a property under contract. All you need is appraisal and title, you can close in under 30 days.
2. Act quickly
In an extreme seller's market, the quickest buyer is often the one who wins the bidding war. As soon as a home hits the market, schedule a showing to view the property as soon as possible. Be prepared to make an offer quickly after you've viewed the home.
3. Craft a strong offer
When you make an offer, ensure that it's strong and includes a competitive price. Speak with your real estate agent to find out if the seller has any preferences or specific requirements for the offer. While you can no longer writer a "love letter" to the seller, your agent should know ways to present the offer to make you stand out.
4. Consider an escalation clause
An escalation clause can help you win a bidding war by automatically increasing your offer by a predetermined amount, up to a certain limit, above any other higher offers. This clause is especially useful when competing against multiple offers, and it shows the seller that you're willing to go above and beyond to secure the home.
5. Be flexible
Sometimes, offering to be flexible on closing dates or contract terms can give you a competitive edge in a bidding war. Be willing to negotiate with the seller and their agent to find a solution that works for everyone.
6. Work with a seasoned real estate agent
Finally, working with a seasoned real estate agent who has experience in bidding wars can give you a leg up on the competition. An experienced agent can offer valuable insights into the local market, as well as tips and tricks for crafting a winning offer. (Hint: that's me!)
In conclusion, while buying a home in an extreme seller's market can be challenging, there are several strategies you can use to improve your chances of success. By getting pre-approved, acting quickly, crafting a strong offer, considering an escalation clause, being flexible, and working with a seasoned agent, you can make your dream of homeownership a reality.