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  • Writer's pictureDave & Christie Merrick

Buying a Home in a Seller's Market

We are in the midst of a strong seller's market right now. That means that home inventory is very low, and therefore there is a lot of competition for each home that comes available. Here is how you can be prepared for success in today's market.

  1. Work with an experienced real estate agent. This market is so tight that making a mistake could cost you the home of your dreams. A qualified agent will help you navigate the market and give you the best opportunity for success. There is no charge to a home buyer to use an agent; the seller pays all of the commission in almost every case.

  2. Obtain a pre-approval letter from a lender. The lender will tell you what price range you can afford and what down payment you would need to make. When you make an offer on a home, your agent should submit this letter with your offer to show the seller that you are definitely qualified to purchase the home.

  3. Have your agent set up a direct MLS search for you with your desired criteria. Using third-party sites like Zillow or will put you at a disadvantage, as these sites are often behind the market. You may spot a home on one of these sites only to learn that it has already been sold. Be prepared to act QUICKLY if you see something that interests you. Homes in this market are often sold within a few days of listing, so you will need to move fast.

  4. Be prepared to write an earnest money check. Earnest money is a deposit that shows the seller that you are "in earnest" regarding purchasing the home. If a buyer defaults on the purchase after the due diligence period is over, the seller may be entitled to keep the earnest money. The earnest money goes to the seller at closing. The typical amount for earnest money in our market is 1% of the sales price, rounded to the nearest $500. An earnest money check should be made out to your agent's broker or to the closing attorney - check with your agent to see which is best. Many brokers require that the earnest money be in the form of certified funds.

  5. Make the best offer you possibly can. Your agent will determine if the asking price is low, fair, or too high. You should make an offer at market value without going over what the home is worth. Your agent's advice is highly valuable at this point. Unfortunately, this is not the time to make a low offer and try to negotiate with the seller. Sellers are receiving 100% or more of the asking price right now in most cases, unless the home has been overpriced.

  6. Besides price, consider other terms that might make your offer attractive to the seller. For example, you could forego asking the homeowner to make any repairs, although you should still have a home inspection to identify any problems with the home that you will need to address.

The bottom line for buying in this market is to BE PREPARED. If you know what to expect, you will have the best chance of getting into your dream home.


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