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Navigating a Seller's Market


Navigating a Seller's Market

With inventory near record lows and interest rates at their highest point in years, you may be thinking now is an impossible time to buy a home. However, while it can certainly be a challenge, it is nowhere near impossible! Even though all signs point to the Fed lowering interest rates this year, we're still likely to remain in a seller's market for the time being. With that in mind, I thought now, heading into the normally busy Spring market, would be a good time to offer some home buying tips for this current environment.

So, let's start with the basics: What is a seller's market? In it's most basic sense, the definition of a seller's market comes down to economics 101: Supply and Demand. Right now, there are more people looking to buy a home than there are homes on the market or people interested in selling their homes. For reference, according to market experts, in a balanced real estate market (where there are an equal number of buyers and sellers), there would be about 6 months worth of inventory on the market at any given time. Right now however, we are sitting at just 1.25 months of supply in the DC Metro area. That's an incredibly tight market. If you're interested in buying a home in this seller's market, it's important to understand these real estate market trends and how they will affect the buying process. 

What's the best way to gain that knowledge? Work with an experienced local real estate agent! A good local agent will understand the nuances of the market in the area where you're looking, negotiate effectively on your behalf, and potentially be able to identify off-market listings. An experienced agent will understand what is needed for a buyer to be competitive in this market.

Given that your's truly is just that kind of agent, here are some tips to help you prepare to buy in this competitive market:

1. Identify a competent and trustworthy lender and get a mortgage pre-approval. It's so important to talk to mortgage lenders BEFORE you start looking for a home. An experienced lender will be able to help you understand what you can afford, what loan options are available to you, and how much cash you can expect to need between down payment and closing costs. In this market, you need to be prepared to move FAST, so if you wait to talk to a lender until after you've found the house you want, you may find that it's gone by the time you've got that pre-approval letter. If you need a recommendation, I work with the best!

2. Be prepared for multiple offers. Once you identify a home you are interested in buying, you should expect there to be multiple other offers on the property because of that pesky supply and demand issue we talked about above. This means, you need to be prepared to make your strongest offer up-front. Your agent can help you navigate this process through removing contingencies, offering above list price, being flexible with closing time, and/or writing a personalized letter to the seller, among other things. This is another reason why it's important to talk to your lender before you start house-hunting. You may be able to drop an appraisal or even financing contingency depending on your qualifications and what your lender has to offer!

3. Stay on budget. With everything discussed above, it's more important than ever to set a realistic budget for yourself and stick to it. It's so easy to get sucked into a bidding war and find yourself over-extended financially. I always talk to my clients about determining what a home is worth TO THEM, especially in these multiple offer situations. I can tell you what the current market says the home is worth, but I can't tell you what it's worth to you specifically. There has to be a max price, a price where if the house sells for above it, you will feel alright about walking away. 

4. Be patient. There is a house out there for you! You may just have to wait a bit longer than you'd like to get it. It can be frustrating to spend time waiting for a house you like to come on the market or to lose out in multiple bidding wars. Just hang in there and keep an open mind, prioritize your must-have vs. nice-to-have items, and be prepared to act quickly when the right property does come along.

If you're thinking about jumping into this market, have questions, need advice or more tips, reach out! I'd be honored to be that experienced local agent for you.

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