Blog > How to Make the Best Offer on a Home in a Seller's Market
By Ashley Melton, Realtor®
We're currently in a strong seller's market and homes are selling quickly.The average days on the market in the Charleston area is 31 days and nationwide it's 32 days according to the MLS for ALL listings combined. In actuality, I'm seeing widely varying numbers for this. And it's for this reason it's incredibly important you're prepared to make the best and most attractive offer you can when you find the home you love. In this article, I'll answer some of the most common questions I get about how to make the best offer on a home in a seller's market.
Tips for being a competitive buyer in today's housing market
Buyers need to be financially prepared before they start the home buying process in today's market. By that I mean, you need to be pre-approved and have your down payment and closing costs saved. If you have a home to sell, it needs to be under contract, or it's highly unlikely the offer on the home you have your eye on will be accepted. In addition to being financially prepared, it's also important to keep your emotions in check during the offer process so you can make sound decisions for your future. With that being said, here are some of the most common questions I get about making an offer on a home:
"If you have a home to sell, it needs to be under contract, or it's highly unlikely the offer on the home you have your eye on will be accepted."
Should I be prepared to pay over asking price for a home to be competitive?
When it's a "Seller's Market" like it is currently, buyers will need to assume they'll be paying at least the list price for a home, and possibly a bit higher. This is definitely something to keep in mind when budgeting for the home you want. Currently, the list price vs. the final sales price varies quite widely with location playing a large role in those fluctuations. So, while I recommend having a set budget with additional "Cushion", the amount of cushion could vary depending on your desired location in the Lowcountry, so a discussion with your real estate agent is advised.
Will I have to compromise on location to buy the home I want?
If you're willing to wait as long as it takes to get a home in the location you're looking for, don't compromise. If you don't have the time to wait, a compromise on location or renting in the preferred area should be considered.
How can I make my offer more attractive to the seller?
Buyers can consider waiving contingencies to make a stronger offer, such as home inspections, financing, and appraisals. A cash buyer can waive any contingency they prefer, while a buyer seeking a mortgage will have certain contingencies that can't be waived. The decision to waive contingencies should be carefully considered to avoid buyer's remorse later, though.
In a healthy market, (also known as a balanced or neutral market) a buyer can ask the seller for many concessions, and in many cases get them. Closing costs, home warranty, and transfer fees come to mind. However, in the current market, the buyer should be wary of asking the seller for anything extra.
"...in the current market, the buyer should be wary of asking the seller for anything extra."
Should I do something special to make my offer stand out? Like write a personal letter to the seller?
In this market, the initial offer needs to be as attractive as it can be, otherwise you may not have a second chance. Some Realtors® are getting away from the personal letter to the seller. Realtors®, like myself, follow fair housing guidelines and these types of letters can violate fair housing laws without the buyer realizing it and imperil your offer, altogether.
Can I balance my needs as a home buyer with the seller's needs?
In a seller's market, the seller's needs are going to prevail making it difficult to find a balance with the buyer's needs (You) and the seller's. Heavy competition can lead to trying to make your offer as appealing as possible and as a result - you could make risky decisions. My best advice is that you should know your limit and stick with it.
"Heavy competition can lead to trying to make your offer as appealing as possible and as a result - you could make risky decisions."
What are some other mistakes to avoid when making an offer on a house?
You should always consider what the market conditions will be in the future. While it may be smart now to pay over the asking price, what will that look like when the market shifts? Will you be underwater? Having an experienced real estate agent to help you consider these pitfalls, make the most educated decision on your offer strategy and submit your offer correctly and in a timely manner is crucial. To learn more about choosing the best real estate agent for your needs, you can read my blog post HERE.
Ashley Melton, Realtor®
www.CharlestonPalmettoHomes.com
843-670-2333