Tips for Buyers in a Seller's Market

Park City
Summit Sotheby's International Realty
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Today's real estate market is seeing low inventory and quick sales for the good listings that do come available. For today's buyers it may feel like a stressful, hurried race. When a good home does come up, it can be common to have multiple offers. Good listings come and go fast, and as a buyer if you wait too long you'll keep missing out while watching the prices continue to rise.

It's also important for buyers to know that you may not get your way. The market has shifted, and the dynamics have changed. It does not mean that it's not a good time to buy, in fact it's a great time to buy. Today, pricing is moving back upward and there is a renewed confidence in the real estate market.

Here are some tips to help you be successful in your home buying process.

1 - Be Ready to Move Fast

The first tip is that you must be ready to move quickly when the right property does come up. To start you'll be best served by hiring a great local Realtor® who specializes in your area of interest. With their help you can study the market in detail. You will want to know the active listings available and start to narrow down what is most important to you. You may not be able to get everything you want in a home, and your Realtor can help you weigh all options and figure out what features you desire the most. You can also spend a lot of time browsing homes online to learn how pricing differs for various neighborhoods and locations. The more you know about the different properties out there, and what you specifically want, the more ready you will be when the right fit comes up.

2 - Start with a Strong Accurate Offer Price

A large part of studying the market in detail, is studying current and recent pricing. You will want to compare the prices of active listings to the prices of recent pending sales and closed sales. The recent closed sales, and the actual selling prices will be the most valuable information for you to gauge the values of the available inventory. Only use actual sold data from your Realtor's MLS (Multiple Listing Service). Knowing prices accurately is so valuable to you, so you can better know what price to go with when you're ready to submit an offer. In today's active market, lowball offers just don’t work. If the listing is priced well, you'll need to be accurate with your offer price, right from the start.

3 - Include a Large Earnest Money Deposit in Your Offer

An easy way to make a very strong impression on the seller is to submit your offer with a large Earnest Money Deposit. Earnest money is the deposit you submit with an offer. A strong earnest money deposit up front really does show your good intentions. Also, make your earnest money amount extra large. The average for earnest money differs across the country. For example, in Park City, Utah we typically see around 2% of the offer price. The great thing about earnest money is that in most cases it is fully refundable, up to your due diligence deadline. So as long as you cancel within your set timelines, you get the full deposit back. So there is no real risk. If you make the earnest money amount quite large, it appears as such a positive to the seller and really places you in a favorable view. If the property ends up in multiple offers, this is one aspect where you can easily set your offer well above the others.

4 - Set Short Deadlines in the Real Estate Purchase Contract

Sellers love to see a quick contract process. When writing an offer, the quicker deadline dates you can do the better. For due diligence we typically see two weeks allowed. If the property looks to be in good condition, you can assume the inspection should go well with not too many major concerns. So try to make it 10 days, or 1 week to get that done. If you run into problems, and have a valid concern, you can always request for the necessary extra time. Often if there is a legitimate issue, the seller will understand and will grant the appropriate and fair extension. If you are doing a cash sale you can keep shorter timelines. If you are using financing, you will be very limited on the financing and appraisal deadlines dates, but you can at least keep short dates for the due diligence. Also, if the home is a full-time residence for the seller, the closing deadline date may not be able to be too quick, as they may need time to coordinate their move out. The best route for all of this is to have your Realtor consult with the seller's realtor to see what dates are most ideal to the seller. If you can make your dates appealing to the seller, you'll have a better chance of getting the deal.

5 - Pay with Cash or Include a Loan Pre-Approval Letter

The saying is true, cash is king. Cash sales are much more certain to close, as you don't have the unforeseen issues that commonly arise out of mortgage underwriting. A seller will 10 times out of 10 prefer a clean cash deal to one requiring financing approval. If you cannot do cash, you must have a pre-approval letter to demonstrate your ability to obtain the financing. Submitting your offer with a pre-approval letter from your lender again shows your commitment to the purchase, and shows your ability to make it through closing.

Your Realtor is Your Best Guide

The main takeaway here is to engage the process and educate yourself. Our best recommendation is to take advantage of your Realtor's expertise. If you have a good Realtor, they can inform you of the current market mindset and trends, and can then help direct you in writing the best offer you can do. Your Realtor is there to help you and look out for your best interests. You may not get everything you want, and you may not get the property if you end up in multiple offers, but you can know you made your best effort.

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