Want to buy the home of your dreams in the current, flaming-hot housing market? Be prepared to pull out all the stops if you expect to outflank the fifty other buyers who are probably bidding on it.
That’s the mindset many house hunters have adopted in a market where the inventory of homes for sale is historically low, prices are historically high and the availability of new homes on the market keeps plummeting.
As CNN Business reported on Friday, buyers are going to extreme lengths to find the right home, and it goes beyond the usual bidding wars. In some cases, buyers are so desperate that they’re waiving the normal appraisals and inspections — a huge risk that could cost them tens of thousands of dollars if a home appraises for much less than the sale price or requires expensive repairs after the sale has closed.
Many buyers automatically offer prices well above those being listed and agree to pay the difference in cash. Others are trotting out lavish gifts to sellers, such as free stays at Caribbean villas. Some even send “love” letters to sellers — which might run afoul of rules laid down in the Fair Housing Act.
These types of offers underscore how difficult it is to find a home these days. U.S. home sales sank to a seven-month low in March amid a shortage of available properties, Reuters reported last month. Existing home sales dipped 3.7% to a seasonally adjusted annual rate of 6.01 million units. That was the lowest level since August 2020, and it came in below economists’ expectations of 6.19 million units.
Because it’s so hard to find the right home in this kind of market, it’s important to do everything you can to maximize your chances of success. In March, Forbes outlined these seven important steps to finding a home in a seller’s market:
- Get a mortgage preapproval.
- Look for homes under your budget so you have the financial flexibility to bid up.
- If you’re borrowing money for a down payment or are receiving the money as a gift, give yourself extra time to comply with your mortgage lender’s requirements, such as submitting gift letter or “seasoning” funds in your account for some period of time.
- Shop around for the best real estate agent, preferably one with a record of success in your preferred neighborhood and price point.
- Don’t fall in love with just one home.
- Don’t focus exclusively on price when negotiating, but think about other contingencies or conveniences you can offer the seller, such as a rent-back that would give the seller more time to find a new home.
- Expand your search beyond one ideal neighborhood.
Finally, be patient. “In a normal real estate market, it could take maybe one to two weeks to find the right home, but in a seller’s market, it could take three-plus months,” said Paul Welden, a Phoenix area Realtor with the HomeSmart Realty Group.
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