It's important to know how buyers can deal with a seller's market because right now, in many parts of the nation, as well as here in Maricopa County, listed homes do not stay available for long. The average days on the market are fewer as inventory becomes more scarce. This causes multiple offer situations to materialize, particularly in homes priced under $200,000. While this certainly is good news for sellers, it's not a welcome phenomenon for buyers.
How Buyers can Deal with a Seller's Market
Economists and real estate industry professionals use a formula to determine if a particular locality is in a seller's market. The equation involves dividing the number of active listings in a single month by the number of homes sold during the same month. Here's an example: in county A, there are 12,000 homes listed for sale during August and 4,000 sell during the same month. So, by diving 12,000 active listings by 4,000 sales, the quotient equals 3. That means if no more homes are listed, it would take just 3 months for all available homes to sell.
House hunting is challenging enough at any time; shopping during a seller’s market is a whole additional difficulty level—and that’s what would-be buyers are seeing across the country. The supply of homes is low, demand is high, and sellers are in control. If you’re not careful, you’ll be left drying your eyes with the broken shards of your rejected bid. --Realtor.com
Of course, there are dynamic forces which create a true seller's market. For instance, no or very little new homes are built, a thriving local economy, home prices continue to rise, multiple offer situations are common, and similar conditions. In such situations, buyers can feel overwhelmed and as there is no viable chance to find a befitting home. But thankfully, there are ways to navigate through the market successfully. Here are some helpful suggestions for how buyers can deal with a seller's market:
- Get a loan pre-approval. Unfortunately, there are some buyers who believe or given the advice being pre-qualified is enough to start house hunting. That's simply not the case because it's only a cursory glance at a buyer's financials. A pre-approval determines the amount a mortgage applicant will be allowed to borrow. So, be sure to get pre-approved and not just with any lender but one that offers credit-underwritten pre-approvals.
- Be willing to be very patient. If there's one thing you'll experience as a buyer in a seller's market, it's the fact homes you'd like to see in person go under contract before you have a chance to tour those properties. This is frustrating but it's a reality which must be accepted. Be willing to cope with the anxiety or it will drive you insane. At the very least, you'll probably jump into a home purchase contract as a rash decision if you don't.
- Give the seller some incentives. A short or long closing schedule, a large earnest money deposit, dropping certain contingencies, and other incentives will give you an advantage over your competition. Be sure to consult your buyer's agent about devising a strategy and be prepared to reassess said strategy if you are not able to buy a particular home and have to continue your search.
- Do not micromanage the negotiations. Buyers and sellers alike sabotage deals because they interfere with the negotiations. While it's certainly okay to offer suggestions and input (which you'll be asked for anyway), the negotiations are best left to experienced professionals. Too many deals fall-through as the result of buyers and sellers micromanaging.
If you’re in the market to buy a home around West Bell Road, North 175th Avenue, West Carmen Drive, elsewhere in the Surprise Farms community or another location in Surprise, don’t hesitate to contact us for local market information. We’ll help you find the right home with most of your wish list items.