The demand for homes nationwide seems to be growing, which can make it tougher to find and buy a home. In April 2015, the national median price rose 8.9% from a year earlier, properties sold more quickly, and a rising proportion went at or above the asking price, according to the National Association of Realtors.
With rising demand and a faster-paced market can come new challenges. Buyers may find it hard to make their offers stand out, especially if competing bids start topping asking prices. On the flip side, sellers may wonder if they’ve set an asking price that’s too high or too low. Whatever your circumstances, here are some tips to help you deal with a heated market.
Be prepared to act quickly
The time that a home spends on the market can be a matter of hours or days, depending on the area. To handle this pace, make sure your financial paperwork is in order for a lender and that you can make a cash deposit quickly. Preparing a checklist of basic features you want can help you weed through new listings to find those that fit so you can react rapidly.
Make your offer stand out
When competing with other buyers, consider steps like these to make your offer stand out:
- Agree to ignore minor defects that might otherwise reduce the price.
- Waive typical contingencies, such as passing a home inspection or having an acceptable appraised value.
- Let the seller know you’ll cover the costs of the transaction, which can run from 3% to 6% of the purchase price.
- Be ready to offer more than the asking price to counter rival bids.
Prequalify for a mortgage
Regardless of market conditions, pre-qualifying for a mortgage is a practical move. Lenders like First Bank & Trust give you an estimate of how much you can borrow, considering your current financial situation and the amount you’re prepared to put down on a home. A written pre-qualification notice may be crucial to some sellers and could make the difference.
Hire a buyer’s broker
Work with a buyer’s broker who will put your interests ahead of a seller’s and can help you understand local pricing trends and evaluate homes that look appealing. This agent may also give you early warning on new listings and help gauge whether a property is overpriced.
Set the right asking price
A listing agent should be able to help you see what similar homes have sold for in your area, so you can set an asking price that entices buyers without sacrificing too much gain. This is one of the most important aspects of the selling process. Setting the price too high may drive off buyers, extending your home’s time on the market. Setting it too low may mean giving up some value, but may lead to a quicker sale. Pricing it above appraised value could lead some lenders to refuse to finance a purchase.
Be ready to respond quickly
Once your home is listed, you may find yourself with multiple bids of the same caliber very quickly, assuming the asking price is appropriate. To manage this process, you may want to work with your agent to set a deadline for final offers.
Readjust the price if necessary
Buyers may suspect that a home that’s been on the market longer than average may have defects and stay away. If your house languishes for too long, it may be time to reassess the asking price.
In a heated market, being ready to respond quickly can mean the difference between closing on a deal and letting several slip away. Whether you’re a buyer or seller, be prepared to stand by what you offer and to manage your expectations so you’re satisfied with the final deal.
Courtesy of Spencer Tierney, NerdWallet