By Sadie Fowler
The real estate market can be difficult to navigate for both buyers and sellers, especially for anyone buying or selling for their first time.
First-time buyers can easily become overwhelmed as they search for homes, while sellers hoping to get the best price for their homes might be frustrated if offers are slow to come in or fall short of their asking prices.
“The real estate market has its peaks and troughs, just like any business entity,” said Belinda Arender of IBERIABANK in Murfreesboro. “When weighing the affordability of purchasing a home, you have to take into consideration — is this a home I can sell later? What is a sell without a prospective buy?”
If met with an underwhelming market, many sellers can pull their homes off the market and wait until it becomes more advantageous to sell. But buyers, particularly those shopping in a seller’s market, may not have that flexibility.
Buying in a seller’s market can be challenging and frustrating, for sure, but buyers can strategize a survival plan and still land the home of their dreams.
Murfreesboro has several mortgage lenders who can teach clients how to navigate the market. See a listing of quality local lenders below.
Some of the tips local lenders will likely touch on when guiding your through the process include knowing your budget and getting preapproval.
First, before you visit the lender, examine your finances. The first step toward buying a home has nothing to do with deciding the style of home you want, but rather, knowing what you can afford. Track your spending to learn exactly how much is coming in and going out each month.
Figure out how much debt you have and then go the extra mile by ordering a credit report so you can see how potential lenders may see you and address any errors. Also, study past bank statements to further study your spending habits, looking for areas where you might be able to cut back if need be.
Once you’ve studied your own budget and bank account, advance to the next step, getting preapproved. This is crucial in the competitive sellers’ market in which we live today.
Sellers’ markets typically feature low inventory and prospective buyers who do not have a mortgage preapproval letter in hand when making offers may lose their dream home to fellow buyers who have gotten preapproval from a lending institution.
Sellers may be impatient with buyers who have not yet been preapproved for a mortgage, even accepting a lesser offer from buyers who are ready to begin transactions immediately. The preapproval process is relatively quick and simple, so buyers should not hesitate to apply.
Lenders will often indicate to prospective buyers how much they’re willing to lend them, and that figure is typically considerably more than buyers are willing to borrow.
In a seller’s market, bidding wars can quickly drive up prices, but buyers should stick to their budgets so they are not house poor after buying. Sticking to a budget can be difficult in a seller’s market, but such patience will likely pay off in the long run.
Another tip: Be ready to compromise. Unless there’s the rare unlimited budget involved, buyers often must compromise when purchasing a home. That’s especially true in a seller’s market with limited inventory.
Buyers who need to buy a home must identify their needs versus their wants and recognize the likelihood that they will have to compromise.
Working with local real estate agents and understanding the local market is also a major advantage for prospective buyers.
A well-maintained property with all of the bells and whistles that today’s buyers demand figures to attract many offers, and buyers who have found their dream homes must be prepared to make an offer that sellers can’t refuse.
Standing out in a sea of other potential home buyers is not always so easy, but buyers can go the extra mile in hopes their offer is the one sellers ultimately accept.
First, buyers can establish a strong rapport with the sellers. It’s not uncommon for homeowners to develop emotional attachments to their homes, and buyers should keep that in mind when viewing a home and negotiating their purchase. Sellers won’t want to hear about how ugly a home is or how much money buyers will have to spend to bring the home up to their standards.
While buyers must weigh such variables when making their offers, keep it as cordial as possible and avoid any inflammatory remarks during the negotiation process. Sellers may be more likely to accept a lower offer from a buyer they like than a higher offer from someone they don’t like.
Another tip in going the extra mile in securing the deal is not delaying an inspection. When a property is drawing significant interest, buyers can set their offers apart from the rest by arranging for a near-immediate inspection.
Lastly, buyers should consider including an escalation clause in their offers. This clause acknowledges that a potential buyer is willing to increase his or her initial offer by a predetermined amount to exceed any bids that are higher than that initial offer. When sellers trigger such clauses, they are often required to show the other offers they received that triggered the escalation clause.
Escalation clauses show the sellers you really want the house while keeping potential buyers’ hopes of buying the home alive when the bids are competitive.
Prospective home buyers may find themselves in some stiff competition upon finding their dream homes. But a few simple strategies can make their offers stand out and increase their chances of buying their ideal homes.