Recent market craziness in Bozeman may have you wondering how you can succeed as a buyer in this seller’s market. Beyond buying out of necessity, is it even worth buying right now when the competition is so stiff? Well, it’s certainly hard to ignore the savings potential of historically low mortgage interest rates. Mortgage rates are expected to rise later in the year, with the average 30 year mortgage rising from 2.68% in December 2020 to 2.74% in January of 2021. Interest rates have a direct effect on your monthly mortgage payments, thus determining how much home you can afford.
This means that if you are a buyer, you may be able to afford a higher-priced home than when interest rates were over 4% about 24 months ago. This among a myriad of other reasons might say for you that it’s time to buy. Entering this market buyers should be informed, prepared, and flexible in order to find what they need. Let’s take a look at what buying is like in a competitive market and what sellers are looking for in an offer, so you can get your offer accepted on your future home.
How To Succeed As A Buyer In A Competitive Market:
- What Is A Seller’s Market?
- Buying In A Competitive Market
- What Do Sellers Look For In An Offer?
- 6 Tips For Getting Your Offer Accepted In A Sellers Market
What Is A Seller’s Market?
To put it plainly, a seller’s market is one in which there are more home buyers than sellers. Outsized demand generally means that sellers have the upper hand in negotiations- perhaps going under contract quickly, getting offers over asking price, or receiving minimal demands from buyers. Homebuyers can expect increased competition for homes, thus having to bid higher and work harder to woo sellers into accepting their offer. Cash offers carry more significance in this market too.
Buying In A Competitive Market
In Bozeman, we are in the midst of a very competitive real estate market and a record low inventory crunch. As such, buyers can expect to see multiple competing offers on a home and homes swiftly going under contract, sometimes in mere days. With this in mind, understand that it’s very important to be prepared and maintain a rational mind throughout the process.
First, do your research and establish your non-negotiable criteria. With homes going under contract quickly, it’s important to determine exactly what kind of home you are looking for.
- Home type (single-family, condo, multi-unit)
- Neighborhood or location (any restrictions such as school districts?)
- Home features (bedrooms, bathrooms, size, amenities, yard)
- Price range
Search the MLS – can you find homes that fit these criteria right now? If not, which are you willing to compromise on? Narrow these down now to avoid having to make hard decisions under pressure later. Another tip: try to limit your emotional attachment to homes and be willing to walk away if the home crosses your risk threshold. Be calm and collected so you can stick to your plan and not make unnecessary sacrifices in doing so.
What Do Sellers Look For In An Offer
It’s hard to speak for every seller but generally, they will want to reduce potential risks so they can close as quickly and smoothly as possible. Attractive offers from buyers will meet their price goals and are straightforward and fully secure in financing. This could mean they want offers over the asking price, as few contingencies as possible, and a pre-approval letter from a lender. An all cash offer, higher deposit, or an offer to pay their closing fees may also catch the seller’s eye.
Practically speaking, the seller could be concerned about how much time they will have to move. The settlement date, whether sooner or later, will be an important detail to factor into your offer. And on a personal level – writing a sincere letter to the sellers that speaks to their home can, on occasion, get the job done.
Tips For Getting Your Offer Accepted In A Sellers Market
1. Prove You Have The Funds
After getting pre-qualified with a lender, go a step further to get a pre-approval letter to include with your offer. This can assure that financing will not become an issue later. Pay in cash if at all possible. Sellers love buyers that can pay in cash because it signals that the buyer is serious and has the funds to prove it.
2. Move Quickly
It’s a hot market in Bozeman so you have to be proactive! Have automated listing alerts set up with your agent and be prepared to see houses immediately. Stay in constant communication with your realtor so you can expedite the process of finding, viewing, and making an offer on a home. Be prepared to respond quickly if the seller makes a counter offer, you might have a very short window.
3. Make A Strong Offer
You don’t have to offer 100% of what you can afford right off the bat, but make sure your offer is competitive. To show the seller you are serious, you could include a higher earnest money deposit or offer to cover their closing costs. Escalation clauses can help in some situations by automatically increasing your bid if a bidding war occurs. But they also reveal exactly how high you are willing to go, which will benefit the seller when negotiating. And depending on the seller, a higher upfront offer could make a better deal. Consult with a realtor to figure out which offers are being accepted in the current market and what tipped the deal in their favor.
4. Limit Contingencies
A contingency means that the transaction of the home will only take place when certain conditions or demands are met. Common contingencies require a home inspection, a home appraisal, and/or secured financing to close the deal. There are lots of other contingencies that can clog up the closing process, like one that requires the buyer’s home to sell prior to closing. For sellers, these demands present as a risk that your offer will fall through, leading to the house going back on the market. Waiving these contingencies will strengthen your offer by providing a straightforward path to closing – but also increases risk on your end. Consider that if you want to be competitive, which of these risks are you willing to take?
5. Write A Letter To The Sellers
It’s normal for sellers to have an emotional attachment to their home. By writing them a letter, you can reassure them that the home will be well cared for after they leave. Call out unique aspects of the home that you love and the lifestyle it will provide. A sincere message helps them understand why their home is special to you and your offer will stand out in a personal way.
6. Find A Great Real Estate Agent
This is the bottom line– in a seller’s market it is so important to have a realtor who can skillfully negotiate your terms. Writing an offer on a home is a balancing act, with all of the above plus price being leveraged. By working with an experienced agent, you can find out where to put in the extra effort – and where you can save your time and money.
Start looking into homes priced in your area right here in our advanced search. I encourage you to reach out if you have any questions about buying a home in this market. Contact us for a consultation here.
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Ami Sayer moved to Bozeman, Montana in 1995, where she quickly integrated herself into the local real estate market. Having worked for McDonald Development Company in Atlanta, Ami knew that real estate was her calling. Already equipped with a degree and graduate work in Economics, she rapidly made a name for herself ….read more