Buying a Home in Seller's Market
You’ve decided to buy a new home. Or maybe this is your first time. You’re probably excited and can’t wait to go house hunting. If the market is a “Buyer’s Market,” one in which supply exceeds demand, you’ll have plenty of time to get your financing in order and look at as many homes as you like.
But what if demand is high and supply is low? Then you’re in a “Seller’s Market.” During a seller’s market, homes sell almost as soon as they become available, often causing buyers to have bidding wars with each other. They attempt to outbid the other buyers, offering the seller more than the seller asked for.
When you find a home you love, you’ll need to act fast. Sellers don’t want to wait for buyers still working on financing. Before you start looking at homes, take care of two things first:
1. Get preapproved for a mortgage – Show the seller you have your mortgage approved and you’re immediately ready to close on the offer. Offers without a mortgage contingency will jump to the head of the line. IAACU can help you get the necessary paperwork and letter you need to make the house your home.
2. Get your down payment ready – Have paperwork showing you have proof of funds.
By getting pre-approved for your mortgage, you’ll know exactly how much house you can afford as well as get a head start on most of the other buyers. Also, since you will know the maximum that you can afford, you can save time by searching only for those houses in your price range. Don’t even try offering less than the listed price during a seller’s market – that will only get you kicked out of the running.
You might also consider writing an offer letter to the seller, explaining a little about yourself and why you love their home. Keep it short and simple; strive to make a personal connection to the seller, but not bore them. Your realtor can send this letter to the seller and their realtor with the formal offer.
Did you know that IAA Credit Union partners with the Federal Home Loan Bank of Chicago to help qualifying members with down payment assistance? With the Down Payment Plus Program, eligible borrowers can get up to $10,000.00 to use towards the down payment and closing costs when you purchase a home. So far this year we have provided over $20,000 in down payment assistance.