With some homes selling the same day they’re listed, buying a home in this red-hot market is quite challenging. Here are 5 tips for buying a home in a competitive market.

1. Become an Expert

Explore your area of interest and become an expert. You will not have time to begin researching after you find a home that you’re interested in. In the time it takes you to pull up your favorite search engine another buyer will have swooped in and snapped it up.

Study maps and know where you want to live. Perhaps more importantly, know where you don’t want to live. Locate undesirable neighbors such as railroad tracks, water treatment plants, and flood zones. If you are looking to buy a new or recently-constructed home, research the homebuilders and find out their reputations for quality and integrity. Look for high ratings based on large numbers of votes and be wary of outliers and loons. For any product or service there are those who will shout from the rooftops that their lives have been ruined by relatively insignificant issues.

Learn about the financial aspects of your area of interest. Look on Zillow or the property appraiser’s website for special taxes levied against homeowners. These can be significant sums tacked onto ordinary property taxes to fund utilities in new developments. Research HOA fees in the neighborhoods you are interested in. Some neighborhoods require homeowners to join their country club which can be an expensive surprise at closing.

Every home you consider must be viewed through the eyes of other buyers. What you buy today you will likely sell at some point in the future. Understand the desirability of different areas. A home can be a stone’s throw away from another but be worth more or less based on its address or zip code.

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2. Get Pre-Approved

Buyers with pre-approved financing have a leg up on those who don’t. Think of it from the seller’s perspective. Accepting an offer is like being married to the buyer for the time it takes to close the deal. It’s a wait-and-see game that takes the home off the market and can end with the buyer failing to sell their home or secure financing. Sellers prefer to hitch their wagons to buyers who are able to prove they can afford a home versus someone who hopes they can.

If possible, get pre-approved for the full amount of homes in your price range. This makes you a more attractive buyer because you don’t need a home sale contingency on your offers. A home sale contingency means the transaction depends on the sale of your existing home. What seller is going to sign up for that when they have multiple offers without home sale contingencies? Sure, you may have to make two mortgage payments, but in this market it will only be for a minute. When your home sells you can use the proceeds to pay down the new mortgage. Make sure the lender allows you to recast the mortgage to bring your payments back down to earth.

3. Be Prepared to Move

You should be prepared to move which means getting your house in order. It makes no sense to put it off. You don’t need to undertake a massive home renovation but you should be doing the normal things to get your home ready to sell. Patch the walls, wash the windows, remove any entertainment/security wiring you installed that might not pass inspection, and replace any unsightly landscaping. Walk around your home inside and out and look it over as if you are a buyer. Little things such as eliminating clutter and personal items can make a big difference in how your home shows. 

4. Look on Your Own

Don’t rely entirely on your real estate agent to find potential properties. Look for new listings and open houses on your own. MLS services do not list properties that are For-Sale-By-Owner. Hop in the car and drive around your neighborhoods of interest to find FSBOs.

5. Make Strong Offers

When there are multiple offers on the table, anything you can do to make your offer stand out may help you get the nod. Ask your agent to reach out to the seller’s agent to see if there is anything you can do to make your offer more attractive. Some sellers want to close ASAP while others need to push out the closing to give them more time to get into their new home. 

It is not unusual for sellers to lease the home from the buyer after closing. Such arrangements are typically for brief periods of time, again, to give the seller time to find a new home. Let the seller know if you are open to this. If you do go that route, make sure you have a formal rent-back agreement in place. Be wary of sellers with new homes being built. Whether it’s supply chain issues or simply the fact that builders sometimes overpromise and underdeliver, a month or two could turn into something more like six.

Conclusion

Under normal circumstances you can afford to take your time and approach the home buying experience in a leisurely fashion. You can find something you’re interested in, sleep on it, and put in an offer for less than what they are asking. If you approach this market in that manner, it is highly unlikely you will succeed. You need to be hungry like the wolf, laser-focused, and ready to pounce on a moment’s notice.

Keep trying and don’t give up. If one gets away, another one will come along. The long game always wins the race. Keep a watchful eye on homes in pending status. Deals sometimes fall through and homes come back on the market. Better yet, consider putting in a backup offer to be ready when that happens. Every day is new opportunity for another home to be listed. Your persistence and patience with eventually pay off.

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