House hunters intending to test the market this spring should prepare for adverse conditions. Home availability remains incredibly low, according to research from Trulia. Nationwide, housing stock dropped more than 10 percent last year. While the descent is expected to slow over the course of 2018 as builders play catch-up, overall inventory levels are likely to remain low for some time. Consequently, buyers searching for properties during the hot spring selling will likely encounter high prices and considerable competition, the National Association of Realtors reported. With this in mind, homebuyers must take a more strategic approach to the home search and adopt some tried-and-true techniques for navigating a seller's market.
Here are some of those buyer-approved methodologies:
Prepare finances ahead of time
This may seem like an obvious tactic, but a surprising percentage of buyers commence house hunts without taking the time to get their finances in order. In fact, the first step buyers across all generations take in the homebuying process is searching for listings online, researchers from the NAR discovered. While there is some merit to such an approach, setting an affordability threshold, looking into financing options and applying for preapproval should come first, according to U.S. News and World Report. This way, buyers can dive headlong into their searches and beat out less prepared challengers who struggle to provide proof of funds.
Embrace in-person shopping
According to the NAR, an estimated 95 percent of homebuyers now search for properties online – and for good reason. Web listings accelerate and streamline the purchasing process. However, some buyers are overly reliant on these resources. In some cases, this leads them to make snap judgments and pass by homes that could potentially work. Sometimes, buyers skew to the opposite extreme and submit private information – including bank account numbers and other financial data – through online portals in an effort to lock down seemingly ideal properties. This can open them up to identity thieves and scammers, the NAR reported. For these reasons, homebuyers should balance follow up in-person with sellers and spend time searching for homes the old-fashioned way: on foot.
Make a strong initial offer
Most people searching for a new home tend to subscribe to traditional negotiation techniques, which tell them to submit initial bids below asking. Unfortunately, this strategy does not often pave the way for success in a seller's market. Due to demand, owners can easily pass over buyers attempting to low-ball them knowing multiple house hunters with higher offers, many above asking, wait in the wings. This means homebuyers looking to purchase property this spring must start with strong offers that at least meet the listing price. While this methodology may preclude any sort of bargaining centered on the home itself, buyers can save money elsewhere. For example, many young homebuyers have begun negotiating real estate agent commissions in an effort to cut costs, according to analysts at Redfin. Such a strategy allows them to obtain new home in a crowded market while still saving some money.
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