Success Strategies For Buyers in a Seller's Market

It seems everyone is talking about the high level of activity in home sales in what is clearly a seller's market. A strong economy has made home ownership more viable than ever and that means homes are selling more quickly and for more money. In fact, National Association of Realtors® Chief Economist, David Lereah, projects existing-home sales will rise 1.6 percent this year to a total of 5.19 million units, while new-home sales should rise 2.0 percent to a total of 921,000 units. “This means we now expect 2001 to be the second-best year on record for existing-home sales, and it’ll set a record for new-home sales,” he said.

While this is good news, it means buyers must contend with some challenging market conditions. There simply are not enough homes for sale to satisfy demand, and for buyers that too often means losing the chance to purchase the home they wanted. Buyers are disappointed when they plan to submit an offer, only to discover someone else beat them to the punch. Buyers also can be frustrated to find contingencies they hadn't expected, or that they cannot qualify for the amount of loan money needed to purchase the house they selected.

In a tight market like this one, buyers can improve their chances of success by making sure they are well aware of their price limits, and by being prepared. If you are a buyer, consider these suggestions to help you gain the advantage in purchasing the home of your dreams.

Strategies for Buyers

1. Order a copy of your credit report, through your credit card company or local lender. Even before seeking mortgage pre-qualification, you need to know that your credit report is clear. An unexpected old debt, or an error on this report is not only an unpleasant surprise, but could prevent you from obtaining financing.

2. Ask a Realtor® to assist you in the pre-qualification process. All credit and financial information is kept strictly confidential, and a Realtor® who checks mortgage lending rates daily can help guide you to the most appropriate lender. Also, it is critical that you understand the full expense of purchasing a home, including expenses other than the purchase price like private mortgage insurance (if you need it), the cost of inspections, and down-payment or escrow requirements. The pre-qualification process will educate you about the full scope of your financial obligations, and how much loan money you are likely to receive.

3. Don't waste time looking at homes outside your price range. While it is fun to shop and see the many types of homes for sale, you could be missing your best chance to make an offer on the home you can really afford.

4. Be flexible when working with a Realtor® who wants to show you a home. Believe it or not, in an active seller's market where inventory is scarce, a home that is available for purchase this morning may be sold by tonight. Too often a buyer misses the opportunity to purchase when another buyer gets there first.

5. Review the Purchase and Sale Agreement before making an offer. It is a deep disappointment to all parties when an unexpected contingency to the sale is discovered after an offer is accepted. Moreover, down-payment or surety money can be forfeited under such circumstances.

6. Submit your pre-qualification report with your offer to the seller. If the seller receives more than one offer in the same day, the buyer who can demonstrate documented qualification from a lender clearly holds the upper hand.

7. Finally, be flexible with the seller. Be prepared to negotiate items other than, or in addition to the purchase price. Your negotiations with the seller should be handled by a professional Realtor®, and should not be adversarial. Negotiations should be viewed as an opportunity for both parties to the transaction achieve their goals and objectives.