Picture You – A Smart Buyer in a Sellers' Market

June 30, 2016 • Author: Lynne Coverdale, Senior Mortgage Consultant, Salin Bank

You’ve been looking for a new home to buy but can’t find one. Join the crowd.
Of the ten tips on REALTORMag®’s 2016 home buyer to-do list, #1 is a “not-to-do” - “DON’T WAIT.” The supply of homes isn’t likely to increase significantly any time soon, and some aspects of home buying might become even more challenging in the not-so-distant future.
Why shouldn’t you wait? In case you haven’t noticed, it’s a seller’s market in and around Indianapolis and Hamilton County, with homes selling fast and at high prices. What factors create a seller’s market?
  • There is a low inventory of homes for sale.
  • Several buyers complete for the same home due to a lack of other options.
  • Low interest rates make it easier for buyers to qualify for a mortgage loan.
“The housing market began to rebound three years ago,” the Indianapolis Star reports.
But now, IndyStar continues, “sales close within days, and sometimes hours, of homes being listed….”

(You may not have noticed, but as your Salin Bank coach for the buyer’s team side, I’ve just gotten you through Step One of negotiation expert Neil Patel’s 4 steps to closing big deals: Identifying the problems.

On to the next steps – timelines and compromises….

Time and timing:

As a smart buyer, you must be ready to shop. Waiting for the weekend or the one day you can tear yourself away from work early just won’t work in this market. That home which caught your attention? You can bet it will attract multiple offers within the first few hours of its being listed for sale. Your Realtor must be ready to shop, too. In this competitive market, your buyer’s agent needs to be time-flexible to accommodate the seller’s schedule - and yours.

Financial readiness:

Even with interest rates so temptingly low, it’s still not a good idea to buy more home than you can truly afford. In addition to the mortgage payment itself, we remind our Salin Bank customers, consider taxes, insurance, association fees, and maintenance.
Having narrowed down the price range for your search, you’re ready to get serious. To demonstrate to both agents and sellers that you’re one buyer who means business, you’ve obtained a mortgage preapproval letter showing you (unlike other bidders), have the mortgage financing end of the transaction covered.

Compromising on contingencies and conditions:

To win in any negotiation, your solutions must be realistic, advises Patel, and both parties must feel the solutions are easy to implement. Applied to home buying, the fewer contingencies you add to your purchase offer, the greater the chance the seller won’t complete the transaction.
Four common contract contingencies seen in a buyer’s real estate market include:
  • Sale and transfer of title contingency (your offer to buy is contingent on the sale of your present home).
  • Home inspection contingency (you can walk away without losing the earnest money if the inspection reveals serious issues)
  • Appraisal contingency (you can walk away if the appraisal comes back lower than the agreed-upon price)
  • Financing contingency (the purchase is contingent on your being able to secure financing)
Contingencies aren’t the only area in which you, the savvy buyer, are willing to compromise. In this highly competitive market, U.S. News & World Report points out, buyers must separate their must-haves from their would-like-to-haves in terms of
  • Amenities
  • Style of home
  • Condition of the home
  • Location
Because you’ve thought ahead of time about all these factors, deciding exactly where your “no-budge” territory begins and ends, you’re entering the house-bidding game much more prepared than other buyers. Realistic, flexible, and prepared, you’re the smart buyer in a seller’s market!