Buying a home is a stressful, yet rewarding, process. If you are shopping for property in a competitive market, those stressors can multiply but so can the potential rewards. High-demand housing markets often have their own unwritten rules that can be hard for homebuyers to understand. We spoke with experts who work in these areas and compiled five strategies that can help you succeed in highly competitive real estate markets.
Choose the Right Competitive Offer
One of the most nerve-wracking parts of making an offer on a home, particularly in a high demand housing area, is choosing the right number for your initial offer. Both too low and too high can get you in trouble, so here’s what the experts have to say about putting together the best offer possible.
Tom Hume, a Realtor® based in Tacoma, Washington, cautions buyers not to make an offer they would be willing to change.
One mistake that buyers make is not putting their best offer on the table in a multiple offer situation. In our market, sellers commonly lay the offers out and choose one, meaning it is too late for all of the buyers not chosen to make changes.
Buyers should review every detail to see if there is anything they would be willing to improve, such as shortening the inspection timeframe or providing assurance that, even if the property appraises low, the buyer will agree to come in with a larger down payment (up to a limit) so the selling price doesn’t have to be lowered. – Tom Hume
House Heroes President Lucas Machado, a real estate expert based in south Florida, has successfully completed over 100 real estate transactions. His advice is similar to Hume’s, with an extra warning for buyers about low listing prices.
In competitive markets, lowball offers will be ignored. You will not get a better price by starting low and seeking a counter offer. Submitting your highest and best from the start decreases the chance that someone swoops in with a higher offer.
Buyers also often think that offering at list price is enough to buy the house—this is not true. In hot markets, agents often set list price below market price to create a buzz around the property. Then, the agents request highest and best. Make sure your highest is on the table and don’t let list price be your guide. – Lucas Machado
Qulia Bryant is a full time residential agent in the greater Charlotte, North Carolina area who specializes in homeownership education and generational wealth strategies for her clients. She also blogs about the local realty market at Move to Charlotte. She cautions that going too high in their initial offer can also be dangerous for buyers.
In a competitive market, a buyer should make sure their best interests are still being met. Therefore, every offer should still be made with satisfactory terms for all parties. Offering way above asking price may get an acceptance, but it will not end negotiations, especially if the home doesn’t appraise [as high as the offer].
Offering above the asking price may not always be accepted, so the key is finding out what terms the sellers are looking for. If the seller prefers a quick closing or plans to make no repairs, then a higher asking price would not be favorable for the buyer or seller. – Qulia Bryant
Click this link to read the full article: 5 Tips for Buying in Hot Real Estate Markets