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Tips on Buying a Home in a Hot Market

An exquisitely crafted home in a hot market is bound to get multiple offers within weeks of going on sale. In a market where sellers have the upper hand, how do you hold your own as a buyer?

Here’s how to buy a home in a hot market:

  1. Hire a good agent – Find an agent who knows when and how to negotiate. Although everything is up for negotiation when it comes to real estate, sellers in a hot market typically aren’t inclined to make compromises, especially when they have other offers. A good agent can also gauge what you’re looking for in a home and show you other listings.
  2. Know what the seller wants – Have your agent call the seller and ask what kind of offer they’re looking for. This can shed light on what’s important to the seller, apart from obvious things like profit. You and your agent can use this information to craft a strong offer.
  3. Get your finances in good shape – Gather your credit reports, shop for mortgages, and make sure you’re in the financial position to buy a home before looking at listings. There are agents who won’t take clients to open houses unless they have a preapproval letter or proof of sufficient funds.
  4. Move fast – Homes in hot markets sell quickly, so you have to act fast. This means going out to view homes within hours of them showing up in listings, or crafting an offer immediately once you’ve found a home you like.
  5. Don’t rely solely on listing photos – Homes that look unremarkable in online photos could still be great houses. You’ll need to look past the pictures since they don’t always convey a home’s overall vibe, floor plan, and other qualities that you’ll only be able to see when you visit the home.
  6. Start with a strong offer – A hot market isn’t the best place to negotiate for bargains. Your first offer should be your best offer. You may only get one chance to place an offer, and it will likely be just one of several that the seller will get.

    Keep in mind that apart from the price, your offer will also include your financing package, contingencies, and closing date. Make these terms favorable for the seller to clinch the deal.

  7. Add an escalation clause – Talk to your agent about adding an escalation clause to the offer, which states your willingness to pay up to a certain amount even if the home appraises lower than the asking price. You can also offer to pay a capped amount that exceeds the highest offer the seller receives.
  8. Be realistic about repairs – Sellers in competitive markets are less inclined to make repairs. Keep in mind that the purpose of an inspection is to ensure that there are no major defects in the home, and not necessarily as a means to get the seller to fix every minor problem with the property.

For more information on buying a home, call Scott Haubrich at (612) 298-5400 or read his buyer’s guide here.