How to Buy a House in a Hot Market
While some say there’s never a wrong time to invest in a home, it’s important to be aware that home buying strategies and tactics can change depending on the market. Buying a home in a hot seller's market can be especially tricky — but with a little patience, preparation and flexibility, you’ll be turning the key to the home of your dreams in no time.
We’ve broken down what a seller's market is, how to compete in it and other tips for buying a home so you can head into your search with confidence — no matter what kind of market you’re in.
What Is a Seller’s Market?
In a seller’s market, home inventory is low and demand is high, which means that some homes might be on the market for just a few hours before receiving multiple competitive bids. As the name implies, this market favors sellers, as they can quickly sell their home at — or even above — asking price. In a seller’s market, it can be more difficult for buyers to stand out since sellers are flooded with offers.
You’ve found the perfect home — now you just need to close the deal! Here are some tips to help you submit a strong offer that has the best chance of getting accepted.
Submit your best offer up front
Submitting a full-price offer — or even over the asking price in some cases — will definitely get a seller’s attention. But solid offers with few contingencies can also get your offer noticed. Whatever your situation, starting with a strong offer is your best bet to score the win.
Offer with high cash earnest money
Earnest money, or “good faith” money, can give you extra leverage in winning a home in a hot real estate market. This is a deposit that’s submitted with the initial offer and is applied to the final sale price. Earnest money for a house or real estate purchase plays a special role in your offer, so it’s important to understand the rules that govern these types of financial transactions.
Consider contingencies carefully
It’s always important to have a home inspection before purchasing a home. However, you can stipulate that an inspection is only informational. This means that if the inspector finds minor issues during the inspection, you'll purchase the home without asking the seller to complete any repairs. Other contingencies can be waived to make a stronger offer, including financing, appraisal or a review of HOA documents.
Write a personal letter to the seller
While standing out in the market with financial incentives can be very effective, there are other ways outside of money that can help you seal the deal! For example, a heartfelt letter can mean a lot to someone who is parting ways with a home they love. Composing a personal letter describing who you are, why you love the house, how you’ll take care of it and how much it’d mean to you can make a big difference to a seller when they have multiple bids.
Prepare to Buy a Home in a Hot Market
Buying a home in a hot market can be challenging, but being prepared can improve your chances of landing your dream home! Part of being prepared is reviewing our home buying resources to help you navigate the process with ease. Then get a quote on home insurance from your American Family insurance agent. Happy house hunting!