Navigating in a Competitive Housing Market

Navigating the Home Buying Process in a Competitive Market

Whether you are buying a home for the first time or the tenth time, you probably have a long list of “must haves” and “wants” for your dream home. With recent real estate forecasts announcing a housing market recovery in 2013, many pockets and niches throughout the nation are already experiencing a competitive market with low inventory of homes and bidding wars. Finding a home that has everything on your checklist can be a challenge, particularly if you are searching in a competitive market. There are, however, some tips that can help you navigate the home buying process in the midst of a competitive market and help ensure that you find your dream home at a price that meets your budget.

1.     Expand your database when there is low inventory of homes for sale. When the home buying market is competitive, a buyer must use all of the tools available to find just the right home. While it is not a good idea to rely solely on a single source to find available listing, it makes even less sense to do this when the market is competitive. An experienced buyer’s agent (someone who specializes in representing home buyers), for instance, will make use a MLS service, newspaper advertisements, open houses, and word of mouth to find you your dream home. Especially in a competitive real estate market, you want to secure the services of an experienced real estate agent who is well connected with the area you are interested in.

2.     Be prepared to make tough decisions. Before you even begin your search, review your lists of “must haves” and “wants” and prioritize them. You want to divide up your "negotiables" from your "non-negotiables." When the market is competitive, you may need to be more flexible because you may be competing with other buyers who are also interested in purchasing the property. If, for example, your desired neighborhood is a deal breaker then maybe, you might have to let go of the idea of having a pool or a three car garage.  Having a clear idea of what you can and can't live without will help you and your real estate agent narrow down your focus.

3.     Be prepared to act. In a slow market a buyer can take more time during the home buying process to decide whether or not a home is “the one”. When the market is competitive, a buyer needs to be ready to act when the right home comes along because it will likely not stay on the market for long.  You probably want to start your search expecting to pay the maximum amount that you can afford when you are buying a seller's market, and it will be to your benefit to make a large earnest money deposit with your offer - the larger the amount, the more appealing your offer will be to the home seller.

4.     Sharpen your negotiating skills. Buying a home in a tight market does not necessarily mean that you have to pay a price that is more than what the home is worth nor does it mean that you will have to settle for less than what you want. It does, however, mean that you need to sharpen your negotiating skills and be creative when you make an offer. For example, try to figure out what is important to the seller so that you can cater your offer to them. For instance, if the seller needs to be out of the home quickly can you offer a quick closing? Maybe the opposite is true and the seller needs extra time before they vacate the home in which case you could offer to extend the date of possession.

5.     Consider a fixer-upper. If you cannot find your dream home because the market is too competitive, consider buying a home that you can turn into your dream home. Even in a seller’s market, homes that need considerable work still tend to move slowly because many buyers cannot see the potential or are not willing to renovate. If you are open to a fixer-upper, you can increase your range of choices as well as the likelihood of finding the perfect home.

Although the home buying process may be a bit more difficult when the market is competitive, if you start by following these simple tips and work closely with your real estate agent you will soon be able to find the home of your dreams in no time (Zip Realty).

Til next time,

JC