In the real estate industry, the plain English translation of a “seller’s market” is relatively straightforward — there are more people who want to buy homes than there are people who are selling them. In other words, the demand for homes outweighs the supply of them, and over the past year or so, this is exactly what we’ve seen in our local real estate markets.
As a result, the average price of homes rises as the competition for them between eager buyers heats up. In many cases, it isn’t uncommon to see individual listings receive offers from multiple different buyers — sometimes dozens of different offers!
So, with such fierce competition for listings on the market, where does that leave buyers? Especially those without the same financial power as some of their fellow bidders?
This post is all about how buyers can find success in hot seller’s markets — even those buyers with more humble bank accounts — no matter how hopeless the market can seem. To learn more about what you can do to give yourself a fighting chance as a buyer in a hot seller’s market, read through our homebuying tips below.
Get Pre-Approval
Whether you’ve got the financial means to bid 50% of a home’s asking price or 5% of it in your down payment, neither will make a difference to the home’s sellers if you can’t put your offer together in time.
You might not think it, but you’d be surprised how many hopeful homebuyers set their sights (and their hearts) on a particular listing before they’ve even been pre-approved for a mortgage. While getting a mortgage pre-approval is essential to understanding exactly what your homebuying budget is, it’s also essential for buyers to have a pre-approval on hand when pursuing a home.
Because the pre-approval process can take some time to finalize, many homebuyers miss out on being able to submit offers for homes they really want due to the fact that they haven’t done their due diligence in speaking with a mortgage specialist beforehand.
In hot seller’s markets, being able to act quickly when you need to makes the difference between winning bids and missing out on them, and it’s the buyers who are prepared that earn the biggest rewards. No matter what your homebuying budget is, your first step to buying a home should always be to have a firm mortgage pre-approval ready ahead of time.
Ensuring your mortgage is all in check before setting out on your house hunting journey is just one of the steps you need to do to set yourself up for a successful purchase. Find out more about how to secure your financing and everything else you need to do before you buy here:
Prepare Your Current Home For Sale
In less competitive market conditions, it’s normal for sellers to accept what is known as a “conditional offer” for their home — that is, an offer that depends on the buyer, seller, or both meeting a set of conditions before the transaction can be finalized.
One of the most common conditions is the ‘Sale Of Property Condition,’ which basically means a buyer’s offer for a home is accepted pending on the condition the buyer can sell their existing property during a defined time period. If the buyer can’t sell their current home in time or for a certain amount of money, their offer to purchase their new home falls through.
Still not 100% sure what conditional offers are all about? Find out more by reading our informative post on Conditional Offers: 4 Things To Know here.
In hot seller’s markets when there’s hefty competition for homes between buyers, however, such conditions are much less commonly accepted by sellers. When sellers have multiple different offers for their home to choose from, the chances of them accepting one with conditions that are inconvenient to them — like the Sale Of Property Condition — are much less likely. However, that doesn’t mean it’s impossible to buy a home with that strategy.
If you’re in a position where you can’t or don’t want to sell your current home before submitting offers for your next one, the best thing you can do to compete with other buyers is to do everything you can to prepare your current home for sale now. That way, when you do submit an offer that includes a Sale Of Property Condition, you can act as quickly and efficiently as possible to sell your current property and meet the deadline of your offer’s firm closing.
Doing everything you can to get your current home ready for sale before submitting any conditional offers for new homes can make all the difference on your upcoming house hunt. Find out what you can do to get your current home in market-ready condition as well as what you can expect to sell it for via the links below.
Explore Your Options
Every homebuyer has their own idea of what they want their ideal new home to look like, and it can feel hard to compromise on that vision when your budget should be enough to make it a reality in a normal market.
However, in hot seller’s markets, the cost of homes is easily inflated, and there’s a good chance your budget might not necessarily stretch as far as it typically would. With that said, however, that doesn’t necessarily mean you can’t buy a home that exceeds your expectations — you just need to go about it in different, more creative ways.
For example, if your budget might’ve been enough to land you a move-in-ready three-storey home in Roncesvalles before the market’s surge in buyer demand, a hot seller’s market could’ve shifted the cost of a home like that out of your reach. However, if you’re to adjust your initial expectations, you can still find something that’ll fulfill your need and won’t break the bank.
If you’re willing to find creative compromises for one or more features such as location, size, or the overall condition of a home, your chances of purchasing a new home within your budget will definitely increase. Perhaps your new home is a few streets away from your ideal location, or it’s not quite as big as you’d hoped, or it requires a few minor improvements or renovations to get it up to the standard you want. Whatever you’re willing to compromise on now will benefit you in the long run, and will mean your current house hunt will be much, much easier for you.
Ready to start searching for properties that fit the bill without breaking the bank? Have a look through Our Featured Listings page here to see what’s currently on the market.
Get Top Quality Guidance
Perhaps the single best thing a buyer can do to get a leg-up on the competition in frantically hot seller’s markets is to secure the services of a seasoned real estate professional. While the current real estate climate might seem extraordinarily prohibitive to many buyers, chances are most experienced Realtors® will have had to work in similar if-not-worse markets before.
As a buyer, it can prove invaluable to have the services and expertise of someone who has comprehensive experience helping buyers maneuver through challenging markets on your side when setting out to purchase a home. Not only will an experienced real estate expert help you navigate the market and negotiate on your behalf, but they’ll be able to advise you on everything else you can do to find success on your house hunt.
If you’re determined to make your dreams of homeownership a reality in a competitive seller’s market, it’s always in your best interest to find a real estate professional who gives you the best chance of making them happen.
Over the course of our long careers in real estate, our team at Sidorova Inwood Realty has helped countless buyers find success in the most competitive seller’s markets in Toronto’s history. Find out more about who we are and what some of our past clients have to say about working with us here:
