Tuesday, August 30, 2016 / by Cody Ford
With inventory still low in the Louisville area housing market, buyers may still find themselves in bidding wars with soaring offering prices and anxiety levels through the roof.
In a competitive market like we are currently in, it isn’t uncommon to have the home of your dreams snatched quickly off the market within days of its first appearance. Buyers need to be savvy, especially when inventory is low and homes are selling quickly.
After securing a licensed realtor or buyer’s agent to help represent you in your quest for that home of your dreams, here are five tips to winning an offer in a competitive housing market.
1. Get Pre-Approved, Not Pre-Qualified
There is a huge distinction between these two things and the difference can make or break your offer.
Pre-qualification is the initial step in the mortgage loan process in which the buyers provide a lender or bank with an overall picture of your financial status, which includes debt, income and assets. After this information is evaluated, a lender will give you an idea of the mortgage amount for which you may qualify. Pre-qualification does not mean you are assured a loan. It offers no certainty that your offer has a high likelihood of closing. Sellers are looking for certainty.
Pre-approval goes one step further in the approval process and is much more involved. You will complete an official mortgage application and supply the lender with documentation necessary to perform an extensive background check on your financial background, along with a current credit rating. Once you are approved, the lender is ready to make you a loan based on the information you have supplied. This will allow you to make a firm commitment to buy a home and your offer will be more attractive to sellers because you stand a higher probability of closing.
Some listing agents will not even accept an offer without pre-approval because when homes are moving quickly, they don’t want to experience a delay because the buyer has hit a financing roadblock.
2. Be Ready for Action
Once your lender has pre-approved you, you are ready to start your search. The key to a searching in a competitive market is to be available to view properties shortly after they hit the market because if it’s a great listing, it won’t last long on the market.
3. Be Decisive
Decide in advance what features and parameters your new home must meet. Remember to classify early on what is a need versus a want. In a tight market, the search phase is not the time to decide what neighborhood suits you best, what price range you can handle or what amenities are important. Determine your criteria up front and be ready to make a swift and decisive decision.
4. Bid Competitively
When inventory is low and houses are quickly selling, feeling out a seller’s sweet spot for price is not now. You do not want to offer the absolute highest price you can possibly tolerate, but you don’t want to low-ball them either. This stage of the game is where a qualified agent is critical. By virtue of experience, your agent can evaluate fair selling price and what a home is likely to appraise for in order to close the mortgage and the offer. Trust the advice of your agent, who is working to secure your best interest.
5. Limit Contingencies
Offers that include restrictions such as a contingency on you selling your home or delaying the closing will be very unattractive to a seller. If you have not yet sold your home and have found the home you have been looking for, ask your lender about a bridge loan to cover both mortgages for a short period until your original home sells. A list of conditions will quickly kill a deal, so keep them to a minimum.
The Trish Ford Real Estate Team is committed to representing you and walking you through the buying process each step of the way. We help you prepare for a tight market and the challenges of multiple offers. Loyalty to our clients is our top priority, no matter which side of the negotiations you are on. Call us today and let us show you how to compete effectively and confidently in a competitive and swift-moving market.