Being a buyer in today’s real estate market is a bit like competing in the Hunger Games. Sellers are receiving multiple offers, contingencies are being waived, and almost everything is going over the list price. Regardless, it’s still a fantastic time to buy a home!
Interest rates, although they’ve started to creep up, are still at historic lows. Appreciation, depending on where you live, is expected to increase anywhere from 3 to 5 percent, and owning a home continues to be one of the best ways to build long-term wealth.
As a real estate agent in Arizona, I see first-hand that it’s a battle right now as a buyer. It’s almost like you need to get your mindset in fighting shape in order to compete and succeed in today’s market, but don’t worry, you’re not alone in this. Here are 3 tips to help buyers compete in a seller’s market.
1) Stop Looking for Your Dream Home
We all start our home searches with great optimism. We’re going to find the home of our dreams where life will be perfect and we’ll live happily ever after.
The only thing is, finding the perfect home is about as realistic as finding a unicorn that poops rainbows. There are homes that we love and meet our needs, but there is no “perfect” home. The dream home is a myth created by the real estate world to sell houses. There, I said it. The sooner you can face that fact, the better.
Instead of looking for the perfect home, make a list of the 3 things that you need – location, square footage, school district, etc. – and then be as flexible as possible on everything else that you’d like to have. It may be hard to admit, but you can live fairly comfortably without a Pinterest-perfect kitchen.
2) Know Your Budget and Shop Below Your Means
There’s nothing more fun than scrolling through Zillow or Redfin and finding homes that we absolutely adore. Who cares if they’re $20,000-$30,000 over our price range, right?
Wrong. Looking above your budget is a recipe for disappointment because it creates an unrealistic expectation. It doesn’t matter if your price range is $200,000, $600,000 or $5,000,000, you’ll always be tempted to look just a little beyond what you can afford. It’s human nature.
It’s a strategic error though, particularly in a seller’s market, in which sellers are receiving multiple offers with all contingencies waived.
To compete in that environment, you need to put yourself in a position of strength. The easiest way to do that is by searching for properties $10,000-$20,000 under your price cap, which will give you room to offer over list price, include escalation clauses, and possibly waive appraisal. That is if you have the financial ability to pay the difference between the appraised value and the sale price. Looking for homes beneath your price cap also allows you to consider options like renovation loans, which allows you to get financing for repairs up to a certain percentage of the “after repair value” or ARV of the property.
3) Get Comfortable Putting Down Offers
Real estate is a game of numbers. The more offers you put down, the more opportunities you have to get one accepted. Don’t wait for the “perfect” house to put in an offer. If a home is in your budget and meets most of your needs, submit an offer. If there are two homes that you’re considering, submit offers on both. If a home comes on the market in your ideal neighborhood but you can’t get over to see it for 2 days, submit an offer.
As the buyer, you can rescind an offer or cancel a contract for just about any reason during your 10-day inspection period. Always be sure to consult with your real estate agent regarding the specific laws in your area, but just remember, the more offers you submit, the greater the odds of getting one accepted.
With these three mindset tools, you’ll be positioned for success as a buyer in a seller’s market. May the odds be ever in your favor!
Your Guide to the Phoenix Real Estate Market
Stephanie Perrault has always been passionate about helping others. Whether it be in marketing or real estate, she focuses on understanding your goals and making them happen! Buying or selling a home is one of the most important decisions you’ll ever make. Stephanie takes the time to listen to your hopes for your real estate transaction so she can help you get to the next chapter of your story as smoothly as possible.