Standing Out In a Seller’s Market
As the Spring housing market heats up, you’ve probably heard the words “Buyer’s Market” and “Seller’s Market”. What exactly do these terms mean? Simple economics is the rule of thumb here. Everyone wants to “buy low and sell high,” but unfortunately, this can’t happen for everyone. Simply put, a Seller’s Market = more buyers than sellers and a Buyer’s Market = more sellers than buyers.
If you’re searching for a home in a seller’s market, you’re competing with other buyers for a limited inventory. How do you stand out when you’re facing steep competition?
- Become Pre-Qualified for a Loan
If you’re serious about buying a home, prove it to the seller by talking to a mortgage lender about becoming pre-qualified. Pre-qualification means you have done an initial screening with a lender that shows you are financially qualified to purchase a home. However, don’t confuse pre-qualification with pre-approval. Pre-approval is the next step in the mortgage process, which brings us to our next tip…
- Become Pre-Approved For a Loan
While pre-qualification can help you stand out in a competitive housing market, pre-approval can be even more advantageous. The difference between a pre-approval and pre-qualification is the verification of documentation. The pre-approval process involves submitting a mortgage application and providing documents that verify your income. Pre-approval for a specific dollar amount indicates you are able to obtain the loan, and helps the mortgage lender pinpoint any potential issues that may arise at the beginning of the process (for a breakdown of the difference, click here).
After all, you want to know what you can afford so you don’t waste time looking at homes outside of your price range. For a seller, your pre-approval shows you are qualified and prepared to purchase their home. Another buyer may come in with a higher offer, but if they aren’t pre-approved, you’ll be one step ahead of them.
- Make Your Best Offer
You’re pre-qualified and pre-approved for a mortgage. You know what your budget looks like. In a seller’s market, you don’t have the negotiating power like you would have in a buyer’s market. Come in with your strongest offer upfront. When there’s steep competition, bring your A game to avoid missing out on your dream home!