Investments require a great deal of thought, but sometimes you just have to grab promising opportunities when they come. The current housing market is an example of such a promising opportunity that will be a shame to miss out on. The COVID-19 pandemic may have dealt a heavy blow on the real estate industry at the beginning, but the events that started a few months ago now led to a highly competitive seller’s market.
Salt Lake City, Utah is one of the most competitive markets right now. Market watchers reported that bidding wars happened for 75% of home sales in October 2020. The demand is especially high for single-family detached houses. The rise of remote work arrangements, low mortgage rates, and the idyllic locations of houses in the city outskirts were the drivers of the demand for residential properties in Salt Lake City.
To sum it all up, the demand for affordable, single-family houses are currently high. The supply, however, is limited.
How do you keep up with the competition and successfully buy a house that checks all of your requirements for price, location, market value, and more? Here are some tips for you.
Get preapproved for home loans.
Not to be confused with a prequalification, a home loan preapproval indicates that a mortgage lender has already examined your finances and found that you are capable of paying x amount of mortgage. A prequalification, on the other hand, tells sellers that you can afford the property based on your income. It doesn’t reflect your expenses, so more experienced sellers and their agents won’t be reassured with a mere prequalification.
Raise your downpayment.
Entice the seller with the highest downpayment you could offer. If they are looking to sell immediately or urgently need money, presenting a large downpayment could put your offer high up in their considerations list.
Keep your contingencies simple.
Contingencies are the specific criteria in a purchase agreement that must be met first before the buyer and seller can finalize the sale. Contingent offers are, in good faith, an opportunity for buyers to settle things on their end so that the sale can push through with zero hassle. But sellers can have a less favorable perspective on contingent offers: after all, they essentially delay the completion of the sale. Remember that in a seller’s market, there are more buyers than properties for sale. If you make the purchase contingent on the sale of your current home, or if the seller finds the contingency period too long for comfort, they can easily turn to the next buyer. Sellers will prefer buyers who are ready to make a non-contingent offer on their property.
Accept your seller’s reasonable contingent offers.
It’s a huge risk to waive all your contingencies when buying real estate property. If you’re not comfortable giving a non-contingent offer, agree to accept the seller’s contingencies instead. Examples of reasonable sellers’ contingencies would be asking the buyer to assume the ongoing leases or loans for things like solar panels, home security systems, HVAC, other utilities.
You don’t have to worry about getting the short end of the stick when buying a house in a seller’s market. Follow these tips to increase your chances of closing the sale on your dream house.