With the Seattle area’s competitive market, buying a home is more difficult than simply finding a home you like and making an offer. Inventory is low. It’s not unusual for a single property to attract numerous buyers.
We frequently see popular homes cause large scale bidding wars. Plus, it’s not uncommon for an investor to swoop in with an all-cash offer.
While the current situation definitely benefits those looking to sell, it can make buying a home daunting. This is especially true for first-time home buyers who aren’t accustomed to making quick decisions.
Use these tips to navigate the competitive real estate market and set yourself apart from other buyers:
Know Your Budget
It is easy to get wrapped up in the competition of a bidding war. As a potential buyer, this is dangerous ground. Knowing your budget isn’t just knowing the maximum mortgage your lender will give you. It’s knowing the maximum size mortgage payment you are comfortable making each month.
As you start making offers, keep your budget in mind. Don’t get caught up in the excitement and make an offer you won’t be comfortable with in the long run.
Understand the Current Market
As you house hunt, you’ll probably look at a lot of list prices. The list price is not the current market price. You want to look at what buyers are actually paying for homes in the area. This specifically applies to homes similar to the one you’re considering.
Consider Your Contingencies
In a competitive market, sellers have a lot of choices. One of the ways to beat the competition is limiting your contingencies. A contingency is a condition put in a contract that must be met for the contract to be binding. Contingencies could be anything from financing to maintenance repairs.
Increase Your Earnest Money Deposit
Typically, buyers put down between one and five percent of the sale price as earnest money. When the seller accepts your offer, your earnest money is held in an escrow account until closing. At closing, this money is applied toward your down payment.
To indicate you are serious about your offer, consider making an earnest deposit of at least three percent.
Have additional questions about navigating the competitive market? Give us a call today.