Get Pre-approved For a Mortgage
Getting pre-approved is a great first step. Pre-approvals let you know how much a lender is willing to lend you based on factors like your credit score and income. This allows you to put an offer in knowing you can afford it. Pre-approvals also show the seller that you have the ability to purchase their home and are serious about doing so since you went through the process to be approved already. What's great is, getting pre-approved is pretty easy, free, and requires little documentation. This makes it the first thing you should do before looking for a home.
Find a Real Estate Agent You Can Trust
In a seller’s market or hot market, having a good real estate agent is a necessity. Experienced agents will know how to navigate a hot market by finding good homes as soon as they list for sale. They should also have some tips and tricks up their sleeve for the local market that may give you the extra push you need to win a bidding war and stand out on top. When looking for the right agent there's a lot to consider. Don’t be afraid to talk to more than one. Finding an agent who you can trust and rely on crucial when the inventory is low. During your searching, you may also want to reach out to past clients of theirs. Just like looking at reviews before you buy something check the agents reviews. This gives you first-hand experience on how well an agent performs and if they recommend them or not.
Work With a Local Mortgage Lender
Compared with national lenders, local lenders are more accessible during the loan process. This is very important if you’re buying in a crazy market. Working with a lender that will be there to answer questions, clear up confusion, and move the process along can make a big difference to both you and the seller. A local lender at a local brokerage is most likely to be more helpful and have better or more personalized lending offers and packages, then a national lender will. Local mortgage brokers are also more likely to stick with you through the whole process. When you’re in a rush, the last thing you want is to work with a new loan officer every time you call or get assigned a new one at each stage of the process. Working with one localized mortgage broker from start to finish allows you to build a solid relationship and feel like you're getting the best treatment possible.
Be Prepared to Move Quickly
In a competitive market, homes are sold almost as soon as their listed. In montgomery county PA where I am located. Homes are selling for five to seven percent over asking within just a few days. I just showed a home recently, within in 4 hours of it being live they had six offers over asking price. It can be disappointing, intimidating, and soul crushing if house after house you bid on, you lose. If you’re serious about finding a home, you need to be ready to put an offer in as fast as possible. This may mean keeping an open schedule and seeing the homes as soon as it pops up for sale. I know it's one of the most important and expensive purchases of your life, but in a hot market there's no time to "sleep on it." You have to act quickly. You also need to act quickly on the place you’re moving from. If you already own a home, it should be on the market or sold by the time you make an offer. If you’re renting, make sure you’re clear to move out at a moment’s notice. This will make the process much faster for both you and the seller. If you go into a hot market with an offer that has a contingency on your current home selling. Good luck! It's not impossible but the better way to do it for the average person is to sell your home first, put your things in storage, and have an action plan on where you can live while finding a new home. A sale contingency offer is a little more unattractive. If selling your home first isn't possible you need to make your offer stand out. Whether that's waiving certain inspections, coming in with a home inspection deductible, or offering an over asking price for the home to make your offer stand out, even with a sale contingency.
Make a Strong, Smart, and Lucrative Offer
In a hot market you may not get a second chance to bid on a home. If you want to get the attention of the seller, you should consider bidding over the asking price of the home, and with as little contingencies as possible. I know this sounds crazy. It feels like you're trying to buy something at store for the sticker price of $40.00 and when you get to the checkout line the cashier tells you that you need to better, and that the asking price isn't enough. I know this mind boggles some people. But home sales is a lot different than car sales, or buying a pair of sneakers. Doing this, bidding over asking, will make your offer stand out from other offers in a hot market, and it lets the seller know you’re serious about purchasing their home. Like I said above typical homes are statistically selling for five to seven percent over the list price. Your real estate agent should be able to offer some advice on just how high to go based on your market. Your agent should also help guide you through this and make sure they're helping you getting you the best deal possible. Your offer should also include a strong down payment. Presenting an offer with a high down payment shows the seller that you are financially able and ready to purchase their home. It also helps the loan process go more smoothly, which gives the sellers even more confidence in your offer and that you're more than qualified to purchase their home, and less chance of the deal falling through to financing which is a lot more common than you think.
I hope this helps you out, and gives you a better understanding of how to stand out in a hot market. I hope it clarifies how the market can be sometimes, and maybe can give you more confidence and the upper edge if you're looking for a home in a hot market. Just like the one we are in currently. Stay tuned for more blogs and content, talking about real world situations inside the life of a real estate agent!
-RE/MAX READY EDDIE