Home Buyer ResourcesMarket Updates April 18, 2018

Being Prepared to Buy in a Low Inventory Market

If you’ve been paying attention to home inventory levels you may have noticed that low inventory has increasingly become the new normal. While beneficial for many sellers, this new dynamic has presented challenges for potential buyers. So what can you do to prepare yourself for buying a home in a low inventory market?

Find a Realtor

The first thing you want to ensure is that you have a real estate professional representing you. Your realtor will help you identify and show potential properties, put in offer paperwork, and assist in negotiation process. With less homes available, your chances for multiple offers situations and heightened tensions increases. Your Realtor can help to you to say objective, and make knowledgable decisions.

Plan for Current Living Situation

Coming up with a Plan for Current Living SituationIt may seem like common sense, but before starting the search for your next home put a plan in place for your current living situation. If you own your home, this means selling your current home. Your Realtor can help you by providing comparable properties in the area, as well as help you identify potential renovations and repairs to maximize your home’s value. Realtors can also help save headaches by helping you source and coordinate with contractors. Lastly, and most importantly your Realtor will assess and price your home. A common reason homes do not sell or take longer to sell is that they’re not priced correctly, thus it’s important to be accurate. Furthermore, many sellers are wary about offers with a contingency based on the sale of their current home, and so it’s best to have your house sold first to avoid issues with putting in an offer.

Determine the Bare-Necessities

While we are experiencing low inventory, there certainly is not a shortage of buyers. This means that you need to be ready to act when you find a home you like, or there’s a chance it could go pending before you even decide. In order for you to do this however, you must have a realistic criteria for the area, know what you could/could not live without, and communicate this to your realtor. If area is the most important feature, be aware this will narrow your options on amenities. If particular amenities are desired, this will narrow what areas you’re in. If budget is tight, both amenities and area may be limited. Being realistic with your expectations, will help you to ensure a better outcome.

Get Pre-Approval

Some homebuyers desire to start viewing homes prior to getting pre-approval, however, what they likely do not realize is that this delays your ability to put in an offer on a home when you find one you like. With high-competition in a low inventory market, you could end up losing the home you want. Additionally, it’s important when you begin the process of selecting a lender to choose a reputable lender. There are many lending institutions in the marketplace now that do not ask for supporting documentation and don’t do additional verification like credit checks, income, and asset verifications to determine your pre-approval amount. This could potentially be an issue if your pre-approval amount drastically differs from the verified pre-approval amount.

Being Prepared for Multiple Offers & Negotiation

So you found the home you like, you submit an offer for asking price, you start seeing yourself and family in this home, you can almost smell the fresh paint when another buyer submits a higher offer and you lose the house. Although frustrating, is a reality you need to prepare for. With many homes on the market hours before pending, most sellers in the area are seeing several offers in the first few days and in some cases, hours. Since these sellers do not know you, they will be considering the terms of your offer and this is why it’s important to put your best foot forward with your offer submission. While negotiations are meant to be back and forth, in current inventory conditions, you will need submit a competitive offer just to get a seat at the negotiating table.

Looking to get started with your search started? Find a realtor that’s right for you here.