What Every Buyer in a Seller’s Market Should Know

Buying a home is never easy. The pre-approval and financing process (because who doesn’t love digging through your files to find tax documents and pay stubs!). Finding the right realtor (I know that everybody knows about six realtor friends and choosing the right one can be tricky). Determining your budget (champagne taste and beer budget is a struggle many of us can relate to!). And that’s all preliminary. What about actually finding the right house in a time when the market is devastatingly low in inventory? And if you find the one, what about competing with other offers in a bidding war? Buying a home has never been easy. But buying a home in 2021 may seem harder than ever.

As a realtor, I truly hate that for my clients. It isn’t easy. I recognize and respect that. The challenge is there for me too as a realtor. I want to walk alongside my clients for the fun parts – like the twinkle in their eyes when I see them at a showing and I can tell they’ve finally found it. I want to give them the exciting news that we’re under contract, or that we’re cleared to close. I want to hand them the keys and say, “Congratulations and Welcome Home!” But when I signed up for this job, I understood that those are the more glamorous parts and I’m also fully prepared to walk through the tougher parts, including working with buyers in our current market!

It’s not easy but it is NOT all gloom and doom and it’s also NOT impossible to buy a home right now. I’ve been working with buyers and I’m here to tell you, finding the right house and eventually closing on it IS possible! There are some things about our current market that every buyer needs to understand which can make it a little easier/less painful to go through this process. Here are some things that I think every buyer in a seller’s market should know.

• Price is important but it isn’t everything. Most sellers are looking for top dollar. Of course they are, can you blame them? But a good offer will not neglect the other things that might be important to the seller. I’m finding that what wins deals in this market, in addition to the purchase price, is sometimes the timing. When I write an offer for buyers, I’ll first call the listing agent. What would be most attractive to your sellers? Is there a particular day or window of time that would be best for them to move? Some people need/want a quick close. If that’s important to them, we’ll find out how quickly your lender can get the loan done and we’ll write the shortest contract possible. But what if the sellers need to find another home? Suddenly a 30-day close isn’t so attractive and they may value more time. Trying to write an offer that suits the sellers’ needs and makes their life more convenient can be the cherry on top of an already good offer.
• Think long and hard about the concept of buying a house “as is.” Some buyers are waiving inspections entirely in this market. I won’t advise my clients to waive inspections, not even if there is an understanding upfront that no repairs will be made. I think it’s important to have an inspection so you can understand what you are taking on after closing. Some sellers are still making some repairs, but be aware that while in the driver’s seat, sellers are often reluctant to do much work on their homes after going under contract. Be ready to negotiate repairs or walk away if the seller isn’t willing to repair something that is important to you. Just go into it knowing that it never hurts to ask for a repair, but it’s never guaranteed that the sellers will be willing to fix it.
• It’s hard to compete with a cash buyer. Really hard. Many houses are getting multiple offers these days, so when you write an offer, you can expect that you’ll be competing with other people. Gone are the days of “let’s just write an offer and see what happens, we’ll go up if we need to.” To win a deal in this market, you must go in strong the first time with the expectation that this is probably your only chance to make your offer stand out compared to the competition. That competition might very well include a cash buyer or an investor. This is hard. The truth is most homebuyers aren’t in a position to pay cash for a house and that’s ok! If you are financing your purchase, we’ll strategize ways to make your offer as strong as possible. Some examples are high purchase price, high due diligence fee, short due diligence period, being mindful of terms that are attractive to the sellers, etc. In the end, cash may still win. If you want to be one of those cash offers, there are options in today’s market where a company will buy the house for you in cash, and you rent it back until you sell your home and ultimately purchase it from them, using a mortgage. Sound confusing? It’s not really, it’s just a concept that takes some time to unpack and understand. Just know it may be an option to consider if you find you continue to lose out to cash offers.
• I just mentioned due diligence. If you are in North Carolina, this is a big deal in our contracts. Due diligence is money in the seller’s pocket upon offer acceptance. Period. Due diligence isn’t refunded to the buyer even if the deal falls apart for any reason. Therefore, sellers LOVE due diligence money. The higher, the better. This fee is often a huge factor in winning a deal. Put yourself in the sellers’ shoes. If you were selling your home and had several offers to choose between, wouldn’t you love the one that immediately put more money in your pocket? Even if the deal went South later due to financing or inspections or whatever, that money would still be yours. You can see how this is often a huge motivating factor for sellers. As a buyer, you have to determine what amount you are comfortable with because again, you’re not getting it back. If you find a house you’ve got to have and you know you want it no matter what, then I’d encourage you to use the due diligence fee as a large part of your strategy as we come up with an offer.
• If you are selling a house also, take some time to digest the fact that all the things you are lamenting as a buyer will likely work in your favor as a seller. Your selling price is going to be higher. Your repairs may be fewer. Your bargaining power on things like appraised value may be stronger. If you are just buying a home and not selling, honestly it hurts a little more. But if you are both buying and selling, I like to think of it as a wash. The heartache you may experience over rising prices and low inventory as a buyer is relieved by the joy you hope to experience as a seller getting top dollar for your home in a short amount of time.
• Be realistic and patient. Easy for me to say, right? I’m not the one who needs/wants to buy a house! But I’m part of it, and trust me, I want my clients to get in houses too. Just know that in 2021, it may take a few times, a few offers, to find success. There may be one or two that slip away before finding the one that works. And that’s OK! This is the market we live in, so I encourage you to accept it rather than fight it or resent it. The real estate market is ever-changing and always evolving. This is a season and we don’t know how long it will last. So if you find yourself needing or wanting to buy right now, let’s just take a deep breath and (realistically and patiently) make it happen!