We are currently in the midst of a very hot seller’s market. Historically low interest rates paired with low housing inventory has created the perfect storm, and owners are reaping the benefits.
That being said, it can be incredibly difficult for a buyer to land their dream home within their budget in these conditions, as many homes are selling for more than their estimated value. There are methods that buyers can use to make it happen, though. These include using a discount realtor, going to auctions, searching public records, not lowballing the seller, and more.
If you’re interested in learning about all the different ways to find a good deal in a seller’s market, then continue reading.
Related: Top Real Estate Agents by State
1. Use a realtor
Using a real estate agent is always a good idea when looking for a house, especially in a seller’s market. Not only will they be able to find you the type of property you want in the location you want within your price range, they will also be incredibly useful during the negotiations process. A good realtor will let you know which items to compromise on and leverage tactics to close the deal.
While the average real estate agent commission rate is 5.5%, split between the buyer’s and seller’s agent, it is typically up to the seller to pay these fees at closing. These fees cover the agent’s time and expertise.
2. Ask your agent for a home buyer rebate
A home buyer rebate is when an agent gives their buyer client back a portion of their commission after closing the deal. Rebates and cash back rewards are becoming a more common industry practice to help buyers save money. Home buyer rebates, however, are currently practiced in 42 states, so make sure it’s allowed in your state before asking your agent.
3. Hit the road
Not all homes for sale are listed online or the MLS. Sometimes, owners simply put a “for sale” sign in their yard. Moreover, if there is a particular neighborhood you want to live in but might be out of your price range, drive around and look for distressed or vacant homes with overgrown yards, boarded up windows, etc. Even if they are not listed, if a house looks like the owner has not taken care of it, then they might be willing to sell (and at a lower price).
4. Check out FSBO websites
Some sellers choose to forgo using a real estate agent and list their homes on a for sale by owner (FSBO) website, such as FSBO.com. Buyers can search these websites for good deals, especially when considering that the average FSBO home sold for $77,100 less than agent-assisted sales in 2020.
5. Go to auctions
Researching auction websites and going to traditional courthouse auctions is a great way to find unlisted properties at prices below market value. Buyers can also view bank-owned properties through auctions as well.
One of the biggest differences between buying a home through an auction and the traditional purchasing methods is that you don’t usually get to see the home before you buy it. You will also have to put down cash, as lenders and mortgages are not allowed.
6. Search public records
Searching public records in local newspapers and government websites can help buyers find short sale and foreclosed properties. These homes are cheaper because the lender is trying to make up whatever losses they can.
Public records like social media can also help reveal why someone wants to move. For instance, if a seller is trying to quickly get out of town because of a new job or a divorce, knowing their motives can help during the negotiation process.
7. Word of mouth
Asking people in your network if they know anyone who is thinking about selling their house is a good way to get to an owner first. In this seller’s market, being able to make an offer before the property is listed will reduce the competition and high counteroffers. Check in with neighbors, attorneys, contractors, wholesalers and insurance agents. Homes up for pre-foreclosure also get around by word of mouth.
8. Put down a large earnest money deposit
An earnest money deposit shows the seller that a buyer is serious about their purchase. The larger the deposit, the more serious your offer will seem. In a seller’s market, anything you can do to make your offer stand out and demonstrate that you have the funding to make sure the deal goes through will be beneficial.
9. Offer a flexible move-out date
The more flexible you can be during a seller’s market, the better. If a seller needs to move out a few weeks longer than expected, allowing them to do so could make the difference between them accepting your offer or another buyer’s.
10. Get your financing in place
Before even beginning your home search, make sure you are pre-approved for a mortgage. Getting pre-approved will let you know how much money you can realistically spend. Thus, you will save time by not even looking at homes outside of that price range.
Furthermore, if you put in an offer on a home without having your financing in place, you could lose the deal if the financing does not come through.
11. Act fast
Don’t dilly around during a seller’s market. If you see a home that you love within your price range, make a strong offer as quickly as possible. Competition is fierce right now, and homes are not staying on the market for long. Moreover, if someone else puts in an offer before you, you will likely have to make a higher competing offer to get the home.
12. Make your offer simple
During a buyer’s market, buyers can list out their demands and hold the right to refuse a deal unless the seller meets them. In a seller’s market, however, competition is high, and the seller has the luxury of choosing the simplest, best offer for them.
If you include a laundry list of contingencies in your offer, it could turn off the seller and push them to look at other offers.
13. Pay in cash
If you have the means to pay in cash, then do it. Paying in cash is much faster than waiting to get approved for a mortgage and the funds to come through. It also makes sellers feel secure knowing that they will not have to wait for the sale to finalize.
14. Don’t lowball
Do not put in a lowball offer during a seller’s market. Make sure your offer is at least at the listing price, especially for a property in a popular area. Other buyers will probably put in offers that are thousands of dollars above listing price, and you will be competing with them.
15. Modify your expectations
If your main goal as a buyer is to get a good deal, then you will likely need to sacrifice certain features. For example, you may be able to get a home with all of your desired features and square-footage, but it may not be in the area you want. Or, you may find a home in your dream neighborhood, but the interiors and appliances are outdated. Make sure you understand what is most important to you before you begin your search so you can prioritize.
16. Expand your search
Consider expanding your search to different neighborhoods, cities or even states. Although the cash and funding you have on hand may not get you much in your current city, it could be a significant amount in a different part of town.
17. Consider waiting
The seller’s market is expected to last for at least another few years, even if it calms down a bit. If you do not need to move immediately, consider waiting until the hype dies down. Currently, home prices are skyrocketing, but it will not stay that way forever.
18. Negotiate your realtor’s commission
Buyers are not limited to just negotiating with the seller. Another way to save money on a home purchase is negotiating with your realtor on their commission rates. Lower commission rates translate to lower closing costs for sellers, and thousands of dollars in savings.
19. Research, research, research!
Make sure you are dedicating the proper amount of time and energy into your home search. Finding a good deal in a seller’s market will likely mean scouring the internet for homes for sale day in and day out.
20. Offer to help with closing costs
Sellers have a variety of fees they must pay at closing, known as closing costs. These include realtor commission, title insurance, home inspection, home appraisal, property taxes, mortgage fees, transfer taxes and more. They also cover a portion of the buyer’s closing costs. Once all is said and done, these fees add up to 8-10% of the final sale price. To make an offer more appealing, buyers can offer to help take on some of the costs that are typically left up to the seller.