With the number of homes for sale across America currently below historical averages, buyers everywhere are figuring out how to win a bidding battle – and I’ve got some great tactics for you.
First, let’s take stock of the situation. According to the National Association of Realtors (NAR), there were 4.3 million homes for sale in May. That compares with 5.1 million just 12 months ago.
But here’s the good news for buyers: Total inventory of unsold homes rose 3.8% from April to May. Also, the median price for existing housing of all types fell 3.1% in this period to $396,000.
NAR says that “relatively steady rates have led to several consecutive months of consistent home sales”.
There’s also a level of seller impatience at sitting on the sidelines positively impacting these numbers.
However, it’s still a competitive marketplace. And even despite higher mortgage costs, most sellers are not at the point where they have to discount to find a buyer.
So, below are some strategies for you to adopt as a buyer when you find other parties equally interested in winning the deal.
Know the seller – Too few buyers understand the seller’s motivation and circumstances. The more you know about their aspirations and needs, the better placed you will be to negotiate successfully.
Rent-back – Many folks sell their home before buying the next property – a safety-first approach. However, that means they must move quickly once the deal is done. You can win hearts and minds by offering to rent the property back to them so they can extend the period they need to search for a new home. To clinch a deal, a 30- to 60-day offer might work.
More flexible – Waiving some contingencies can work. You must keep those that protect yourself, such as a home inspection and formal loan approval. However, you can be flexible on a closing date or tell the seller you’ll cover any minor repairs.
Be confident – When you bid, show the seller evidence for your number. Cite similar neighborhood sales and show you have a pre-approved loan from a reputable lender.
Quality agent – The help of an experienced agent can make the difference in these situations. Winning the deal isn’t always about offering the most money. Our local market knowledge can provide additional guidance on a fair price.
Be earnest – Offer earnest money – usually 1% of the value – to show you are committed to making a deal. Of course, if you walk off the plate you lose your cash so only go down this path if you are genuinely interested.
Be calm – Don’t make impulsive decisions or get too emotionally attached to a property. There are always other homes to buy. Paying too much can lead to buyers regret.
Know your limit – At the end of the day, do not blow through your budget and be mindful that interest rates could rise again. You want to be able to manage your finances regardless of what happens.