How To Deal With Low Home Inventory: Tips for Homebuyers
In a low-inventory market, searching for a home can feel like an impossible feat. Finding very few options (or maybe even nothing) that fits your needs and budget is increasingly common in these markets.
But, hang in there. These tactics can help you find a home you love (even in a low-inventory market):
1. Get pre-approved
You’ll want to take the appropriate steps to have your financing secured before you start your home search. Talk to a local mortgage lender to get pre-qualified and pre-approved before you start looking for a home. This will help you determine the price range for your home purchase and make it easier to negotiate with sellers. Be sure to have the necessary paperwork ready to show your lender.
Once you’re ready with a solid down payment and a mortgage pre-approval, you’re ready to enter the housing market.
2. Act fast, but be patient
In a seller’s market, you might expect to “hurry up and wait” as the saying goes. When new listings become available, be ready to view them and make an offer.
You might be ready to pounce on a home as soon as it’s available, but don’t if the home isn’t right for you. It may seem discouraging, but patience will pay off when you find the right home becomes available.
3. Put your best offer forward
In low housing inventory markets, it’s important to put your best offer forward. Since you are likely to face competition with other potential buyers, there may not be much room for negotiations. Making a reasonably high offer backed by a pre-approval letter will enhance your chances of closing a deal and reassure the seller that you’re serious about your offer.
Even if your offer has the highest price, you can’t be confident that you’ll beat out all other offers they receive. Sellers can accept any offer they consider to be the “best”. That may be based on other factors, like the certainty of the buyer’s financing or flexibility on closing dates. If possible, try to limit contingencies. These can turn sellers away from your offer if they are wanting to sell quickly, especially if they have received similar offers with no contingencies.
4. Be responsive & flexible
Besides being fast on the offer, you may want to be open to closing on your new home sooner than later. The seller may need to expedite the process for a number of reasons, but there are a couple ways you can do it:
- Shorten your inspection time frame
- If you’re pre-approved, you may be able to close as quickly as an all-cash buyer.
5. Write a great offer letter
A great offer letter can make you stand out against other buyers you may be competing with. An offer letter lets the seller know who you are, why you’re interested in the home, and what you’re willing to offer. If sellers care about their home (and their neighbors), they like to see their home go to someone they like.
How can you make your offer even stronger? Two tips:
- Most lenders will offer full underwriting approval in today’s market, which can allow you to close faster – giving you a competitive advantage if the seller is looking to get the process done as fast as possible.
- You might only have a day or two to get your offer submitted after viewing the home. In order to be “offer ready”, it’s crucial to have any supplemental paperwork to prove to the seller that your offer is secure. Mortgage pre-approval paperwork and proof of funds for the down payment are examples of this.
6. Find a real estate agent
A REALTOR® can help you understand & tackle a low inventory market. Find an agent who can:
- Search for homes that meet your criteria in the areas that you do (or don’t) want to live in.
- Determine if a potential home is priced fairly & help you negotiate.
- Protect your interests and make sure that contracts are not unfair to you.
- Guide you through various issues that can come up when buying a home.
Team Melton is ready to help you with the home buying experience. Our team of professionals has over 50 combined years of real estate experience to assist you through every step of the process.