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Buying in a Hot Market

The real estate market has been on fire for a few months now. If you’re selling, there’s never been a better time to put your house on the market. If you are trying to buy, however, it’s a cutthroat market with many properties being sold astronomically above the asking price. It is possible to find a home to buy in a red-hot market, if you follow these tips.

1. Know your price

If you haven’t taken a good look at housing prices lately, you could be in for a shock. Spend some time looking at listings to ensure you have enough funds. Also, check into your credit, pay off anything that could impact your credit rating (high balance on credit cards, student loan, car loan) and put off major purchases. You want to be in good shape when you go to the bank.

2. Get your finances in order

Once you have a realistic idea of what you can afford, head to the bank to get pre-approved for a mortgage. In this hot market, it’s not enough to be pre-qualified—you need to be pre-approved so you know exactly what your limit is, and you can act quickly to make an offer. A seller with multiple offers isn’t going to wait while you find out if you can buy the house when 4 other people are waving cash. 

3. Get to know the market

Take some time to think about what you are looking for in a home. Do you want a yard, a driveway, maintenance-free living, proximity to schools, transit or the highways? How many bedrooms/bathrooms do you want? Do you want a house, a semi-detached, a townhouse or a condo in the sky? Do you want modern, or are you happy to buy a house that needs some work and love? 

Make a list of must-haves, nice-to-haves and dream options. Now scroll through real estate listings to see what those features are selling for, and whether they are in your price range. If not, you can increase your budget or lower your expectations. 

4. Work with a professional

A competitive market is cutthroat, and you need the advice and knowledge a real estate professional can bring to the table. They have access to information about what similar properties are listed/sold for in the area you are interested in. They may have inside information about properties that are about to go on the market, or had a deal fall through. You need to be “offer-ready” in a hot market, and an experienced realtor is your best ally. 

Multiple offers are commonplace in a hot market, and working with an experienced realtor can help you ride the bidding war wave. It’s easy to get caught up in the momentum, and you need a rational voice telling you when to keep going and when to stop. 

There’s a delicate balance between coming in with a strong offer, and being outbid because other potential buyers left themselves more room to play. 

5. Be decisive

You found a place, it ticks most of the boxes, it’s in your price range and hopefully will stay there. As soon as you hear about a new listing that fits your list, go see it and decide. Quickly. 

Put in an offer. If you wait, someone else will. If you are the first person to see a property and put in a strong offer, you automatically have the advantage. It’s known as a “bully offer”, especially if your offer is close to asking price. You have to be willing to act fast. If you really want the property, put in an offer with no conditions. Given the choice between an offer with no strings attached, and an offer with conditions, which one would you choose?

6. Leave yourself some room

Spend less time on the purchase price, because in a seller’s market, it is a starting point. It’s far more important to have your finances ready to go, and a strong idea about what your maximum is, so you get the best investment you can with what you are able to afford. 

Don’t start at the top of your finances, because you will have nowhere to go if there is a bidding war. 

7. Learn from your mistakes

In a seller’s market, you might not get the first place you bid on, or the second or the third. If your bids keep getting rejected, take some time to talk with your realtor to figure out why, and either raise your bid or change your criteria. Flexibility is key in a seller’s market. 

A buyer’s foray into the red-hot housing market takes nerves of steel, preparation, flexibility and decisiveness. If you partner with an experienced realtor, you increase your odds of success. Happy bidding!