You can tell the veteran house hunters just by looking at them. First, you can see that look in their eyes that says they have been hurt before. Then, if you watch carefully, you can notice the pained expression that flashes across their faces when friends discuss their new houses. Finally, if you pay close attention, you can see the hope that flickers briefly at each new listing before being ruthlessly pushed down before they are hurt again.
In a seller’s market, buying a house can be an agonizing, heart-wrenching process. After going through it many times with our clients, we have identified three ways in which you can beat the crowd and buy a home in a seller’s market.
#1 Choose your Agent Carefully
Acting as a purchasing agent in a seller’s market requires perseverance, flexibility and shrewd negotiating skills. As a house hunter, you rely on your agent to not only find you the property you want but also to help you beat out other buyers and emerge victorious.
A critical trait to look for in your agent is perseverance. Here’s what we mean by that, in the form of a partial list of what your agent has to do for you:
- Search the MLS listings
- Send out email alerts meeting your criteria and review what is listed to see if it is suitable for your needs.
- Visit the likely possibilities, debate the merits and decide on a yes or no.
- With a yes, we review the comparables, the neighbourhood and street sales, the price the current sellers bought at and then we plan our approach.
- If it is offers anytime, we speak to the listing agent, write up the offer and we submit it for their consideration.
- They respond with some changes to the price or closing date, we discuss and strategize, respond and within a round or two, a conditional sale is made. Over the next week, financing is signed off on, a home inspection takes place and minor negotiations take place with the seller and the deal goes firm – you’ve bought a house!
That is the typical process but in a seller’s market, a number of things change.
- In the time between our sending out listings to you to review and deciding which properties you would like to see, fully half of the listings are sold, either firm or conditionally. We often only find this out when we make the call to book the showing, only to be told that there are no more showings allowed for that property.
- For those properties we can still see, it is not uncommon to see other agents with their clients before and after our time slot and sometimes even viewing the house at the same time as us. The pile of visiting agent cards threatens to overflow the bowl they are placed in.
- If you are interested, we begin my work up on comparables only to be interrupted by the listing agent calling to say that they have an offer they are considering and we have a few hours to decide if we want to put in an offer as well. We speak to see if you’re able to make this major decision to put in an offer that quickly. In many cases, clients are understandably thrown by suddenly being placed into a multiple offer situation well before they thought they would have to decide if they even wanted to make an offer. A small percentage decide they are still interested and we decide on our strategy and write up the offer, throwing our hat in the ring.
- The listing agent comes back to all potential buyers with a request to sweeten their offer before the seller decides which offer to deal with. A tense conversation with you follows, where we are forced to in essence negotiate against ourselves. We remind you of the comparables and do our best to make sure that any decision you make here will not become one you regret later. Our offer is adjusted in some cases and resubmitted and we wait. After what feels like an eternity, the result comes. If we were competing against irrational buyers, we likely do not get the homeand move on, exhausted and back at square one.
It is critical your purchasing agent is willing to persevere until you find the right property at the right price. Even the best of agents can get tired of doing the same dance of showing, analyzing and offering time and again. If you choose an agent who is not committed, the best case scenario is you eventually let them go as they don’t seem to be putting any effort into it anymore. The worst case scenario has you buying the wrong house at the wrong price because your agent began focusing on simply getting the deal done.
The second aspect to look for in your agent is flexibility. This is very important as your wants and needs may change throughout the house hunting process. As what you focus on changes, you need an agent who is able to deal with those changes and still wants to work with your new focus. Whether it is shifting to a condo search rather than a house search, a suburb rather than downtown, or a change in your price range, make sure you choose an agent who is going to change with you.
Finally, have the discussion with your agent about their negotiating skills. Successful transactions rely on the agents involved communicating effectively and working to make sure there are no misunderstandings. In every transaction though, there are moments where your agent can save you thousands or cost you thousands. This is not simply about being hard headed about prices being offered – it is about recognizing that what is valuable to the seller may not have the same value to the purchaser, and vice versa. Exploring all the options and making sure to hold your cards very close to the chest is critical if you are going to get the right property at the right price.
#2 Take Full Advantage of Your Situation
With a carefully chosen agent on board, the next rule is to make sure you take full advantage of your situation. This involves considering all aspects of the purchase you can decide upon. While price is an important consideration for most property sales, other aspects can be used to your advantage.
- Do you have flexibility in your closing date? If you can close fully in a week, you may get the property at a better price and beat out other buyers who needed more time. If the seller wants to sell early but not move out for six months and you can accommodate that, you have an edge.
- Is your financing or insurance ready to go prior to making the offer? If you have been pre-approved for a mortgage or have spoken with your insurance company about the type of property you are putting in an offer on, you can remove those conditions without putting yourself at risk. At the same time you present a cleaner offer that may be more attractive to the sellers and help you beat out other offers.
- Would you make a great addition to the neighbourhood? In many cases, sellers are leaving friends behind in the neighbourhood when they move. If you and your family would be a good fit with the neighbours, make sure your agent lets the seller know that. Children close to the age of others in the neighbourhood, friends who live in the area, compliments on the garden and a promise to keep it looking as lovely – all these things can tip the scales in your balance when the seller is deciding on your offer.
#3 Buck the Trend
The final tip is one that by its very definition is not typical for many purchasers. Go against the grain when it comes to the type of property you are looking for.
- If loft style apartments are all the rage, you can find a lovely condo with slightly lower ceilings at a great price.
- If everyone is looking for move-in ready properties with redone kitchens and bathrooms, consider houses that need some work in order to meet your standards.
- If parking is not critical for you and many people won’t even look at houses without a parking space or two, then you face far less competition for a property that still has value for you.
The key here is not that you give up on aspects you love and settle for a house that is somehow less than what you wanted. Instead, work with your agent to identify those factors that you are ambivalent about that many others value highly and work to avoid properties with those factors. By doing this, you can avoid paying more for a house with features in it you don’t particularly want.
By choosing your agent carefully, taking full advantage of your situation and bucking the trend, it is possible for house hunting in a seller’s market to still be fun, lucrative and successful!
If you want to beat the crowd, then don’t hesitate to get in touch.