5 tips for buyers in a tight housing market
When inventory is low, home prices tend to go up. Attempting to purchase a house in this type of market can make the already complex home-buying process even more overwhelming. To help buyers successfully get through the buying process in a tight inventory market, the National Association of Realtors® (NAR) has five suggestions and created an infographic Realtors may share with buyers.
1. Determine a budget and stick to it. Before beginning the house-hunting process, prospective homebuyers should receive preapproval from one or more lenders to verify the amount of money they're qualified to borrow. Then – after considering additional costs of ownership such as taxes, utilities and insurance – buyers should create a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices. Buyers must be prepared to walk away if the asking price surpasses their budget.
2. Identify desired neighborhoods and home wants versus needs. Buyers may need to compromise on what they believe they want from a home. Certain wants, such as stainless appliances or hardwood floors, can be added later. However, if a buyer wants to be in a specific school district or have a decent-sized backyard, those cannot be addressed later and must be considered during the house-hunting process.
3. Be ready to make a quick decision. In a seller's market, homes rarely stay on the market long, so when a house in their budget checks off all their needs, buyers shouldn't hesitate. Buyers should be ready to submit an offer quickly, or they may risk missing out on the home altogether.
4. Bid competitively and limit contingencies. It is tempting to submit a low offer as a starting bid, but in a seller's market, buyers need to put forward their highest offer from the very beginning or they're likely to lose out on the home. It's also important to remember that in multiple bidding situations it is not always the highest offer that's most attractive to the seller, but the one with the fewest contingencies. Removing restrictions related to the sale of a current home and being flexible with things like the move-in date can make a bid stand out.
5. Work with a Realtor. All real estate is local, so it's important to work with an agent who is a Realtor, a member of the National Association of Realtors, who is familiar with the areas and neighborhoods.