In the last several years, San Antonio’s thriving real estate market has truly topped the Texas charts when it comes to growth and profit. We’ve recently entered into a “seller’s market”, meaning that the demand is highly elevated, making the supply of homes incredibly valuable. In fact, in March of 2014, Forbes named San Antonio the #3 top seller’s market in the US, topped only by San Jose and San Francisco, California!As more and more people join the housing market, interest rates go down for buyers and prices become more favorable for sellers. For the buyer, this means that competition is greater for each house.
Real estate expert Brendan DeSimone explains: “In a seller’s market, the gloves come off and would-be buyers need to act fast, think outside the box, and be prepared to work at the home-buying process.’’
So how do you stay one step ahead of the competition? See our tips below!
1. Consider your wants vs needs...what’s worth compromising and what’s not?
Because inventory is low in a seller’s market, you as a buyer have fewer options to choose from. We highly suggest talking through your wants vs needs with your REALTOR®. Your dream house might not be for sale, but you should be able to find the home that fits your list! Don’t get distracted by flashy extras that you can’t afford. That being said, don’t compromise your “needs” in the rush to bid! If you discuss these needs vs wants in advance, you’ll have a much clearer head when the time comes to make a bidding decision!
2. Find a REALTOR® who will go above and beyond
Besides the final closing signature, the most important action a buyer can take lies in choosing the right REALTOR®! The buyer/agent relationship is always of crucial importance...but it becomes especially strategic when you’re trying to buy in a seller’s market. Because the stakes are so high and the inventory is so low, you want a REALTOR® who truly puts in the extra effort to understand your needs, point of view, and price point. Agents on the buying side are going to have to negotiate very strategically, constantly be on the lookout for new listings, and always communicating quickly and effectively with you as a buyer.
3. Look at homes that are lagging on the market
Even in a seller’s market, some homes in the area will have a harder time getting picked up by buyers. More than likely, the owners of these homes are getting a little anxious to sell...and may be willing to negotiate prices and terms of the deal. While it’s tempting to only look at the newest, hottest properties listed, we recommend considering every option! If you see major potential in one of these homes, you might weigh it against your wants vs needs list. If it stands the test, you might want to consider making an offer.
4. Keep calm and stay flexible
A seller’s market demands a lot of attention from you as a buyer. You’ll most likely be checking listings daily, ready at any moment to pounce on a house that fits your criteria. In this scenario, it’s important that (if possible) you remain flexible in attitude and schedule. Sellers never enjoy working with buyers who make things difficult...and you want to make a great impression! Even when the situation may be frustrating, keeping a calm, adaptable persona will greatly aid you when interacting with sellers. Being prepared and courteous goes a long way in communicating how serious you are as a buyer!
5. Be more than a faceless buyer
When you find the right home and you’re ready to send in a bid, try to personalize the process as much as possible! When comparing bids, give the seller more about you than just competing numbers on a page. Consider writing a personal note to let them know how much you love their property, as well as your excitement and hopes about its potential as your future home. Sellers are still human, and making an authentic emotional appeal will make you stand out among competing buyers.
6. If possible, send an approval letter
When making a bid, many potential buyers will attach a mortgage preapproval or prequalification letter. This simply explains to sellers that you are likely to get a loan. While this is a great gesture, if you can take the process one step further and get an approval letter from your lender (that has already gone through underwriting), this places your status as a potential buyer in high regard! To get an approval letter, you’ll need to talk to a mortgage broker. Talk to your REALTOR® about the process and if you think this is a feasible step for you!
7. Take a different approach: Ask open the sellers what they want.
In most bidding situations, buyers spend a lot of time trying to craft the best offer. Some will waive fees or inspections so that their offer seems most appealing. Essentially, these buyers are trying to gauge what the seller wants and appeal to their wallets and timelines as much as possible. But what if you simply asked the seller what they want? Consider having your agent ask this open-ended question to the seller. This way, you can weigh their preferences and specifications against your needs and customize your bid accordingly. This short interaction could save you a good deal of money in the end!
8. Show them you’re serious up front
One of the biggest problems sellers have in this type of market is the flaky buyer. When home inventory is low, many buyers make a hasty rush to claim a house...only to realize it’s not right for them, causing the deal to fall through. This can make sellers especially wary when it comes to considering offers. If you’re really serious about wanting a home, you might consider putting down a larger earnest money deposit to show the seller you want to follow through. This earnest money deposit usually consists of about 1-3% of the total purchase price and is held in escrow until the end of the sale, when it would go towards the total down payment. Putting down a larger earnest money deposit simply shows sellers that you have good faith in the sale and expect it to close well!
9. Play bidding wars carefully
Bidding wars can cause a kick of adrenaline...but if you end up in one, we recommend remaining cool and collected even in the face of competition! If you truly want to get a deal, set a realistic budget and try to stick to it as closely as possible. Create a range of “ideal” to “maximum” prices you’re willing to pay on various aspects of the buying process. Don’t lose your head or too much of your money in a bidding war!
If you’re worried about getting a good deal, take heart! Angela Shields, President and CEO of the San Antonio Board of Realtors, recently explained: “With tight supply and high demand for homes, 99.9 percent of sellers in March were able to sell their homes for list price...But even though the market is favorable to sellers right now, we still continue to see a steady flow of houses come on the market which is good news for buyers.”
Navigating a seller’s market can be tricky, but it’s definitely possible! Contact a REALTOR® today to get started.