There you were, all excited to start shopping for that next (or maybe your FIRST) house and *BANG* 2020 happens. OK so welcome to the year of total chaos and you’re thinking, “Just wait it out.. we all have to make sacrifices this year…mine just happens to be waiting a bit longer for my new house.” Several months go by as you patiently quarantine with the rest of us and *BANG* seller’s market. At this point, you must be thinking,
“Are you kidding me?? NOW what? How do I get a good deal in a seller’s market? Actually, how do I even get something under contract? Do I have to offer over the asking price? Is there any way at all for me to win in a seller’s market? Should I just go ahead and rent for another few years and forget the whole thing?”
These are all valid questions you should be asking yourself when figuring out how to survive a seller’s market.
So let’s make sure you know what you’re doing out here in this competitive market.
Should I just wait for a buyers market?
Remember that the real estate market is just like any other market. Supply and demand greatly affect the price. There are always going to be highs and lows in any market. These trends are different than inflation. What we used to pay for gas 10 years ago is different than what we pay for it now. That doesn’t mean there are not moments in those 10 years where the prices spiked but when you look at the big picture, you are going to see a steady trend upwards. When we look at the big picture for the housing market we’ll get the same results. Yes, we may be in a seller’s market now, however homes 5-10 years from now will cost more than you are paying now. Homeownership is all about that long-term investment. A huge part of this equation you need to consider is your interest rates. They are still historically low and this will have the biggest long-term impact on how much you pay every month and how much you pay over the entire life of the loan. When you buy a home for $300,000, you are not just paying $300,000 by the end of those 30 years; you are also paying interest. Call your lender and ask them to see this ridiculously scary chart called an “amortization chart.” This graph is not for the faint of heart… You will see how much interest you pay over the life of the loan and YIKES! Believe me, you want that interest rate to be as low as possible. Your future money-savvy self will thank you for locking that in!
How do I win in a seller’s market?
Yes, you might have to outbid other buyers in a seller’s market. An edge you are going to need is an approval letter from a good lender. When a seller is considering their options, they want to see that financing is not going to be an issue at all. There are also several items a seller might be considering other than just the amount you offer. Things like due diligence days, earnest money, sellers closing cost, and financing contingency days all make a difference in how your offer is viewed. You need to have someone on your side making sure you know which of these items matter most to that particular seller and putting you in the best position to go under contract. A good realtor plays a huge role in helping you determine the right things to put in your offer.
What about multiple offers? How do I compete and still not lose out on a good deal?
Remember even if you have to bid over the asking price, you can still win. Compared to what prices and interest rates will be 5 years from now, you are getting a better deal than if you wait. Renting a home is not cheaper than owning a home. Especially in the Metro-Atlanta area, it is often more expensive to rent than to pay your own mortgage! If you are already paying for the roof over your head, it may as well be YOUR roof. The real financial issue happens when you are paying for someone else’s mortgage and throwing that monthly expense down the drain. Your money should be going towards something that benefits your future.
The real way to win.
You do need to be competitive in today’s market, so get some help! Your best bet is to have some real professionals in your corner to help you duke it out and win. Negotiation skills and knowing the right people have never been more important. Make sure you hire a Realtor who is good at both and that next *BANG* will be homeownership!