Buying a Home in a Hot Market
A real estate market can be viewed as a seller’s market, buyer’s market or balanced market. When inventory levels are high and fewer buyers are in the market, we call it a buyer’s market. If inventory and sales remain relatively stable, we call it a balanced market. However, when there are more buyers than properties, we call it a seller’s market.
Over the last 2 years, Lake Tahoe has definitely become a hot seller’s market. The lack of inventory has driven home prices up and many listings are receiving multiple offers.
I have worked with many buyers in this hot market, and have successfully presented the winning offer. These 5 tips can help ensure that your offer is the one that is accepted.
Know What You Want
It is a good idea to research the market for several months prior to deciding to buy. Are home prices being reduced or are they receiving multiple offers? Are you willing to make improvements, or do you want a turnkey purchase?
Make a list of the things that are important to you, ranking them from most important to least important. This will allow you to make decisions more quickly when the home you love comes onto the market. In addition, you can avoid making difficult or wrong decisions in a hot market when the pressure is up.
It is important to get all of your financial documents to the lender at least 30 days before entering the market. They may have requirements that will take time to satisfy. You’ll want to get your credit report and ensure it is accurate.
In most cases, you will need a minimum of 20% as a down payment. Without this down payment, you may need to pay for Private Mortgage Insurance. In Lake Tahoe, many offers are cash offers. It is important that financing is just as solid.
Closing on a home involves costs beyond your down payment, so ensure you have the money to cover any additional fees, inspections or any gap that can come up when the home is appraised. In a hot market, you will need Pre-Approval because being qualified won’t be enough. A seller will want to know that a mortgage contingency won’t become a problem.
Many of my last sales have involved buyers. It is important to work with an agent who understands your needs and has access to listings even when they are ‘coming soon.’ More importantly, during a hot market, you will need a realtor who can negotiate on your behalf to secure the winning offer.
You will want your agent to present your offer in a way that it gets accepted. Don’t make the mistake of using an agent who is inexperienced in negotiation.
We will work together to ensure you receive properties that match your criteria, even before they are listed. If you are living in a city other than Lake Tahoe, you will need to move quickly to view the home and present an offer.
We will ensure that your offer is strong, and it may be that we will need to make an offer for full asking price. An offer with fewer contingencies will be more appealing to a seller in a hot market. Sometimes, the earnest money deposit can be increased to show your commitment. We’ll work together to present an offer that will get accepted.
In terms of contingencies, we will examine things like home inspection, HOA documents and financing, and may shorten the amount of time to have them removed. There are many considerations in buying a home in a hot market, so you need to consider these items in advance.
Additionally, demands on seller might work in a buyer’s market, but can make the difference of whether your offer is accepted or not in a seller’s market. Being prepared, knowing what you want and being ready will ensure you can move quickly when you find your dream home.
A bidding war is common in a market with multiple offers. However, it is important to know the limit of what you can pay. We can work together to get your finances in order so that you can make informed choices.
It is not uncommon for sellers to receive multiple offers in a hot market. These negotiations can be emotional, but it is important to allow your agent to help you remain objective. You will need to know your limits and be prepared to walk away in the event that someone outbids you. In some cases, sellers will respond to why the buyer is interested in the property and not just the amount offered.
I will represent you and your offer in the best possible light. Patience and persistence will be key in knowing how far you can go in your offer and whether another property may be more suitable.
It may be that the elapsed time in making several offers allows you to save more. We will ensure that you are putting your best foot forward at every step of the way.
Whether you are thinking of buying or selling your home at Lake Tahoe, working with me will ensure that you have an expert negotiating on your behalf. Contact me today to get started in the home buying process. I can also prepare a free property analysis of your home.