During your quest to buy a home in Dallas, have you heard from a real estate agent that it is currently a seller's market? This means there is a lot of competition from other home buyers in the area. Don't be surprised if the agent recommends making an aggressive offer when you find your dream home.
A seller’s market is a situation where there are only a limited number of homes available, allowing sellers to keep prices high. A low inventory means there are too few homes for sale compared to the number of buyers. This is normally represented in “months”.
If your agent states there are 2 months of inventory, it means the current homes for sale are expected to sell within 2 months at the current sales level. If the homes sell faster than new ones come on the market, then the inventory tightens. The tighter the market is, the greater advantage that sellers have during negotiations.
Quick Tips to Buy a Home in a Seller’s Market
Pre-qualify for a Mortgage
When sellers receive multiple offers, buyers who are pre-qualified for a mortgage have an advantage. Some sellers will even accept a lower offer based on a buyer's financial situation. Read more about the pre-qualifying for a mortgage.
In a competitive market, buyers must make decisions quickly. If you take a few days to think about whether or not you want to make an offer, the house you want may already have other offers or have even gone under contract.
Make an Aggressive Offer
Your Door agent can provide a local market report. If the average sale price is greater than the average listing price, make your offer accordingly.
Make a Larger Deposit
Earnest money is a deposit to confirm a contract. This is not your down payment and shows as a credit at closing. Under many conditions, just 1 percent is normally OK. In a seller’s market, though, expect to make a deposit of 3 percent or more.
No real estate agent worth their salt will recommend not taking advantage of the home inspection contingency. However, there are other contingencies one can pass on to make the process easier, creating more certainty for sellers.
Go with Cash
If you can pay in cash, you have a competitive advantage. A financial institution is a variable that creates uncertainty. Cash beats a loan every time.
Use Escalation Clauses
An escalation clause is written into your offer. It states that the offer is X dollars, but you are willing to increase it by a certain amount or percentage if other offers exist.
If you would like more information or to talk about buying real estate in a seller’s market, please contact us.