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8 Winning Strategies on How to Buy a House in a Seller’s Market

Most of America is in a seller’s market due to the tight inventory. Nationally, we are at 2.7 months of supply, which puts us solidly in a seller’s market (a buyer’s market is 6 or more). If you are looking to buy a house in today’s seller’s market, you should prepare to face intense competition. The home buying strategies that worked for you before may not work now. As a real estate agent, I’m share some effective strategies to help you buy a house in a seller’s market.

Change Your Expectation

First, when buying a house in a seller’s market, you need to change your mindset. Know that you are probably not going to get the best deal on homes right now. You are buying a home in a competitive market where it’s common for sellers to receive multiple offers on their homes. With more homebuyers than homes for sale, the goal is not to get the best deal but to successfully win the bid and buy the home. If you are not willing to overpay for a home, I suggest waiting and holding off on buying a home! 

How to Buy a House in a Seller’s Market

1. Get Pre-Approved

The first thing you need to do in order to buy a home in a seller’s market is to get pre-approved on your mortgage. In a seller’s market, a pre-approval is not just a nice-to-have but it’s a requirement to buy a home. 

In fact, some sellers will not show their homes to buyers without pre-approval. They don’t want to waste their time dealing with non-serious homebuyers. Also, when you make an offer, you’ll need to submit your pre-approval along with your offer. 

It’s important to understand that a pre-approval is not the same as a pre-qualification, which most sellers won’t accept. Pre-qualification simply doesn’t carry enough weight, and you’ll need a pre-approval to be taken seriously as a buyer. 

So, if you’re house hunting in a seller’s market, it’s best to skip pre-qualification and head straight for pre-approval. I always tell my clients not to delay getting their pre-approvals. Even before you start house hunting, you should have a pre-approval in place. It’s a must-have document in a seller’s market.

How to Buy a House in a Seller's Market

2. Be Ready to Make Offers Fast

When you are buying a house in a seller’s market, you have to act fast. You don’t have the luxury of time, or else you risk losing the house. 

In a seller’s market, many homes are sold within a weekend—listed on Friday, open houses on Saturday and Sunday, and final offers on Monday. If you wait too long, you might lose the house you like. If you are a first-time homebuyer, the process can be nerve-wracking because you are not used to the competitive market and might be hesitant to put in offers so quickly. 

From my experience as a real estate agent, it usually takes losing a few bids on homes for first-time homebuyers to get used to the competitive home buying climate and confidently make fast offers.

3. Bid Competitively

In a seller’s market, the competition for homes is fierce, and the key to success is to make your best offer. With homes selling for more than their asking price and multiple offers on the table, you need to put in your best offer. You cannot afford to make a lowball offer in a seller’s market. 

Since the norm is for offers to be over the asking price, there is no room for price negotiation. To win the home, you need to put your best foot forward and make a competitive offer.

4. Make Your Offer Stand Out

Aside from submitting your best offer, there are a couple of ways to increase your chances of getting the home. One way is to include an escalation clause in your offer, which allows you to increase your bid if the seller receives a higher one. 

Another way to make your offer stand out is to write a letter to the seller, expressing your love for the house and why you would be the best buyer for it. 

As a seller’s agent, I’ve seen this approach work. My client received two similar offers, and the seller chose the buyer who wrote the letter. Selling a home is an emotional process, and the letter humanized the buyer to the seller, which made all the difference. It’s worth a shot!

How to Buy a House in a Seller's Market

5. Pay Cash

In real estate, cash is king.  If you can afford it, paying with cash can significantly increase your chances of winning the bid and getting the home. 

Sometimes, sellers will choose an offer from a cash buyer, even though it’s not the highest one. That’s because if the buyer pays with cash, the seller knows that the sale is virtually guaranteed. There’s no need to worry about appraisal contingencies, which can make the deal go sour. Plus, closing will be much faster with a cash buyer since there’s no need to wait for the mortgage process to complete.

6. Increase Your Downpayment

If you don’t have the means to make an all-cash offer, there’s one thing you can do to make your offer more attractive – increase your down payment. 

Typically, most people put down a 15-20% down payment on their mortgage. However, if you can put down more, it will make your offer more competitive. Why? Because you will need a smaller mortgage, which means your chances of getting final mortgage approval will be higher. 

A seller doesn’t want to accept an offer from a buyer who ultimately doesn’t get approved for their mortgage. If you can show the seller that your mortgage will be approved, then you’ll be a more competitive buyer.

7. Waive Appraisal Contingency

One thing that some buyers do in a very competitive market is they waive the appraisal contingency. I don’t recommend this because I don’t think it’s a good idea.

Before a mortgage gets final approval, the bank needs to make an appraisal of the property to know how much the home is worth. The appraisal contingency clause allows buyers to back out of the deal if the home appraises for less than the agreed upon purchase price. 

If the appraisal is lower than the purchase price, it means that you are overpaying for your home, and the mortgage company won’t approve your mortgage. When that happens, you can either back out or increase your down payment to receive the mortgage amount that the bank is willing to give you. 

Aggressive homebuyers who waive this appraisal contingency is essentially agreeing to buy the house even if it appraises for less than the purchase price. This is a risky move that you might regret down the road since you know you are overpaying on your home!

8. Waive Home Inspection Contingency

In a highly competitive seller’s market, where multiple buyers are bidding on the same property, it’s common for homebuyers to waive the home inspection contingency. This essentially means that you are willing to buy the house as-is, in its current condition. 

Many buyers still prefer to have the home inspected by a professional inspector, with the understanding that if any repairs are needed, they will be responsible for covering the costs themselves. When you waive the home inspection, the last thing you want to do is to buy a money pit! Find out if you are buying a money pit. Check out my article: 11 Signs You are Buying a House that’s a Money Pit

House Hunting Checklist Printable

House Hunting Checklist: Free Printable

Below is my house hunting checklist printable. I suggest you print out copies of this checklist and keep it in a binder. Use it to take notes and to keep track of the homes you visit during open houses or when you are out house hunting with your real estate agent.

Sign up once and you will get access to ALL exclusive content on this website. After unlocking the printable, just save the printable image and then print it.

House Hunting Checklist

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