Buying a home always has its challenges. But when you're trying to do it in a seller's market, the difficulty can reach a new level.
Choose a sharp real estate agent. In sports and in business, it's important to have the best players on your team when facing fierce competition. In a seller's market, that means choosing a real estate agent who not only has proven expertise in the neighborhoods you're interested in but who is also highly responsive and efficient.
Get preapproved. By obtaining a preapproval for a mortgage before you start home shopping, you'll know how much buying power you have. Your offer may have far more credibility than competing ones where buyers didn't take this step.
Don't be too choosy. When the inventory of homes is limited, you probably can't afford to wait for the 'perfect' house to hit the market. In fact, does the 'perfect' house even exist? If you can find a home that checks off most of your boxes, minus some cosmetic updates needed, that's a win in my book!
Prepare yourself to adjust your expectations. It makes the most sense to make exceptions to your criteria for things that can be changed. For example, you can add a bathroom someday, but you can't change the home's location or lot size.
Consider new construction. You may start your search with an intention of buying an existing home. But you may find that new homes have better pricing or availability. You may have to weigh commute time if the new construction is farther away from your work or other activities.
Forget the lowball tactics. In a seller's market, submitting an offer that's well below the asking price is probably going to be a waste of time. Competing buyers often end up bidding above the initial asking price. If you want to be in the game, your bid should be close to if not higher than what the seller's asking. Talk to your real estate agent about the best pricing strategy.
Consider waiting. If your situation allows it, you might consider postponing your home purchase until the market cools down. There are some drawbacks to doing this. First, it's hard to predict when a market will shift and, depending on the economy and other factors, it could be years until conditions change.
Source: USAA, published 7/6/2021