Buying a home is never easy. But when you’re trying to buy a home in a seller’s market, it can be that much harder.
A seller’s market is when there are more buyers than houses for sale. This means that houses sell quickly and sellers have more negotiating power. In a traditional seller’s market, there’s usually multiple buyers bidding on the same property, which allows sellers to be picky with the offers they receive.
So, what can you do to navigate a seller’s market? And is it even possible to find your dream home in one?
Many first-time homebuyers don’t know how to buy a home in a seller’s market, which is why.I’ve put together some of the best strategies available to you.
Why You Need to Work Within Your Budget
Before you start actually looking for a place, you need to determine your budget. Remember that you’re in a disadvantageous position in a seller’s market, so set clear limits for your budget.
Decide on an optimal price and your absolute maximum. Since bidding wars are the usual in seller’s markets, be firm on the limits you set for yourself. Although it may sting to lose out on a property you loved, there will always be another home.
Make A Strong Initial Offer
Securing the winning bid against other buyers means you’ll need to make strong offers. While it may seem counterintuitive to make aggressive offers, passive bids may eliminate you from contention.
Show a seller how serious you are by making an earnest payment with cash. An earnest payment is a deposit that shows a seller how serious a buyer is. If an earnest payment in your desired area is usually $20,000, then offer $10,000 more.
Flexibility can make a seller prefer you over other candidates. If you’re flexible with dates and deadlines, then you can get the edge.
Stand Out Against the Competition
It’s important to stand out to sellers. A great way to do this can be by obtaining a mortgage pre-approval. Some sellers won’t even consider buyers who aren’t pre-approved. It’s becoming more advantageous for buyers to already have pre-approval in place to show sellers you’re serious.
TIP: Not sure what type of mortgage you need? Explore the different types of mortgages available to you in our recent blog post.
Another option is to limit the number of conditions you include in your offer. While conditions are designed to protect you from the unforeseen, they can make your offer less attractive. We only recommend removing conditions, like inspections or financing, if you are really confident in the property you are bidding on.
Be Willing to Compromise
If you can’t find a great home at the right price, then consider expanding your search. It’s never a bad idea to open your mind to new neighborhoods or cities.
Homebuyers will often think of their dream home and spend countless months looking for it. It’s not uncommon for up-and-coming neighborhoods to be overlooked because they aren’t as popular as other more noteworthy ones. These neighborhoods could have the hidden gem you’re looking for.
You may also need to reconsider your list of must-haves. You can make exceptions to your criteria for things that can be changed. You can always start that kitchen renovation later down the road. Sometimes finding your next home in a seller’s market means focusing more on location, lot size, and potential.
Don’t Rule Out Renting
We often get asked: should I buy or rent a home? In a competitive seller’s market, never downplay the flexibility renting offers.
Overpaying for a home that you may struggle to afford isn’t always a sensible choice. And even if the market doesn’t pull back, you can continue searching and saving for that perfect home.
Find a Proven Real Estate Agent
A real estate agent is there to help you navigate the entire real estate process. While any agent can show you listings, a truly great agent will understand the market they serve, housing trends, prices, and more.
Make sure to pick a reputable real estate agent with proven experience in your desired city or neighborhood.
Even if you think you can handle everything on your own, a real estate agent has connections that can help you during your search. Plus, real estate agents are often the first to know when a home is about to be listed.
Need Help Navigating the Current Seller’s Market?
You and many other first-time homebuyers are navigating the current seller’s market. It’s very difficult learning how to buy a home in a seller’s market, but you don’t have to do it alone.
Are you looking for a real estate agent that specializes in Downtown Toronto and the GTA? A dedicated partner that’s all-in on helping you find your next home?
Get in touch with me and we’ll chat about how I can help you find your next home.
Hi, I’m Joel, a real estate professional based in Toronto.
My approach is simple—I put you first. I believe in open communication, total transparency, and meaningful results. I’ll guide you through the real estate process, market values, and always keep the focus on you—and your needs.