As with most states across the country, Arizona is experiencing extremely low inventory which makes it a sizzling hot Sellers Market. Despite the pandemic, local real estate analysts are forecasting these conditions will continue until next year. The following advice pertains to getting an offer accepted in a Sellers Market where buyers outnumber homes and more competition exists (i.e., Demand exceeds Supply).
The following tips can help position you to get the home you want:
- Rely on your real estate agent as your partner. Once you’ve established a working relationship with a great agent, they will be keeping their eyes out for available listings that meet your criteria and sending them to you as they hit the market. You will likely be searching multiple online sites as well like Realtor.com and Zillow. Feel free to search on those sites but when you find something you like, share the property addresses with your agent. There’s no need to call on those listings yourself. Have your agent look into it for you and get all the information you need. Their job is to research potential properties to help you figure out whether it’s a good fit. And when you find one with strong potential to make an offer, they will run evaluations on the home called a CMA (Comparative Market Analysis) to help you determine whether the property is a good value for the asking price. Don’t forget to keep your agent informed if you change your search criteria. They are going off of the requirements you gave them so when your needs change, the only way they can help you is to let them know.
- Get your loan application Pre-Approved. Your agent should have recommended you get prequalified with a mortgage lender before looking at homes in person. Since homes don’t stay available for long in hot markets, getting prequalified first will position you to act quickly while determine a price range so you can stay in budget. This is critical to help you avoid any wasted time. In order to get pre-approved, you will be asked to provide a list of required documentation to your lender to fully process your application. Your efforts get those documents submitted in timely manner will go a long way to show that you are a firm buyer and strengthen your offer when it is presented to the seller. A pre-approved buyer is almost equal to a cash buyer.
- Scope out your desired neighborhoods and keep your agent in the loop. I suggest driving around the areas you like at different times of the day to gauge whether the property location is a good fit. If, while driving around, you run across a home you like for sale (including For Sale By Owner and new construction homes), send the address and contact information to your agent, so they can schedule a tour for you. It is important that your agent makes contact with them first and sets up the appointment directly to make sure the sellers or builder rep knows there is an agent in the picture that has your back and represents your interests. Speaking of new builds, many buyers mistakenly think those nice representatives are working for them when they are showcasing the homes. Truth is, they work strictly for the builder. And if you forget to inform your real estate agent before visiting those places, the builder may exclude the agent from negotiations should you decide to buy, and then you don’t have representation.
- Prepare to act. Focus on your goals. It’s important to be clear about what you can afford and what your absolute must-have’s are in a home on the outset so you can act quickly when you are ready to make an offer. Realize you may not have time to sleep on it. You should always have a running list of top 3 favorite homes so if you lose out on one, you can go for your backup. Once an offer is submitted, stay in close contact with your agent as the seller may counter your offer and require a short time frame to respond.
- Be ready to compete for that home you want. It’s understandable that you would want to start low. After all, buyers want to spend the least amount of money as possible on a home. But in a tight market, most homes will likely have at least one other competing offer. Starting too low will likely cause you to lose out on the house you want. You run the risk of being disregarded as ignorant about the market or insulting to the seller. Recognize the market conditions you are in. The last thing you want is for your offer to end up in the trash bin. And bear in mind, in a multiple offer situation, be prepared to submit your highest and best offer. Decide ahead of time how high you are willing to go to get your desired house and what you are not willing to compromise on.
- Keep concessions to a minimum. Asking for the seller to pay some or all of your closing costs will make your offer less appealing. The more you ask for, the better your competition’s offer looks. It won’t take much for someone else to beat out your offer and snatch the home you want. Remember, there are many other buyers looking at the same properties you are looking at. Whatever made you want to see that home is likely the same thing that attracted your competition to see it.
- Letter to the Seller. This is optional when submitting offers. However, when competing with other offers, a personal letter may be the thing that tips the scale in your favor and will help it to stand out and has proven to be successful.
Buying a home in a hot market can be a bit of a rollercoaster. Give yourself some grace during this process. Buying a home is possible in hot markets as long as you understand what the process entails.
Your real estate agent is there to guide you throughout this journey, negotiate on your behalf, and give you the information you need to make educated decisions along the way.
I hope you find these tips helpful. This and more information about the homebuying process are included in my buyer guide. If you would like to get a copy, feel free to make your request via my contact form.