Are you wondering “should I buy in a sellers market?” If you’ve been wanting to buy a house in South Jersey but are feeling daunted by the competitive frenzy, I don’t blame you.
Data from June 2023 shows that, during a given week, there were just 19 homes for sale in New Jersey’s 08108 zip code... and just 5 of those homes were listed at less than $400,000 🤯
With the average list price of the homes available being well over $500,000, it is becoming nearly impossible for first time buyers to move into the 08108 area, and this is the same story across many towns in South Jersey. So let’s talk about how you can prepare to navigate the twists and turns of this sellers market.
Just how can you stand out in the crowd of eager buyers? 💁♂️ Let’s dive into 6 essential strategies that will empower you and be your guiding compass in this fast-paced arena:
1. Get Your Pre-Approval
Getting pre-approved is a crucial step in your homebuying journey. Pre-approval empowers you with a clear budget and demonstrates to sellers that you are a qualified and serious contender.
📮 RELATED POST: HOW PRE-APPROVAL WORKS
This competitive advantage can make a huge difference in a sellers market; an offer that arrives with pre-approval is typically more attractive to the seller than a comparable offer without a pre-approval. You can also make your pre-approval work even harder for you: when you hire a quality real estate agent they should upload your pre-approval letter into an engaging digital presentation to make your offer really stand out.
2. Be Smart With Your Budget
Now you’ve acquired pre-approval and know exactly what you can afford, the househunt comes next. As you embark on your search, a savvy approach would be to focus on homes that are actually well under your budget. Why?
To provide an example, if you’ve been pre-approved for $400,000 and you bid on a property listed at $400,000, you’ve severely restricted yourself when it comes to negotiation. You have nothing to offer above-ask to beat out your competition. A sellers market usually requires you to offer above list price, AND to cover some (or all) of the appraisal gap. So beginning your search at $350,000, for example, gives you some wiggle room for negotiation in the above scenario.
This financial flexibility enables you to present compelling offers and positions you to stand strong in a competitive sellers market.
3. Compromise Is Key
It goes without saying that if you’re trying to buy in a real estate market where sellers have the advantage, you might have to be flexible... and adaptability is your greatest ally.
Be open to exploring various options in the home you’re looking for, or expand your location parameters. Flexibility allows you to seize unexpected opportunities and discover hidden gems that perfectly align with your needs.
For example, you might be looking for a 4 bedroom property, but perhaps you can look for 2 or 3 bedroom instead that has incredible renovation potential. Customizing the home of your dreams yourself can help you build equity in your property very quickly.
And regarding location: if you’re determined to live in Haddonfield or Collingswood for walkability and downtown amenities but feel priced out of those areas, consider instead expanding your search radius to include towns like Oaklyn, Audubon, or Pitman, which all have growing and vibrant Main Streets.
A quality real estate agent will conduct a buyer consultation with you so they can identify your needs and wants, and where your search strategy can afford you to compromise.
4. Put Your Best Foot Forward
In a neutral real estate market, or one that favors buyers, a househunter may be tempted to offer less-than asking price on a property. That way, if the seller counter-offers a higher price, it’s not too hard of a hit on the budget. A sellers market is not the place for this behavior.
In the kind of market where properties are seeing 40+ showings and are receiving 5+ offers that are all over-ask, you need to go in with your best offer first, right off the bat. Why? Because a seller and their agent will skip right over the less attractive offers and only take the best ones seriously. At JFKLiving, we rate our clients’ offers like a schoolteacher would:
- A+ Offer: An absolutely stellar offer that is well above listing price, and has some great terms.
- A Offer: A truly wonderful offer but not as high as an A+.
- B Offer: A mediocre offer, that probably meets listing price but may not offer any fabulous terms.
- C Offer: An offer that shows the buyer is not that motivated.
Shoot us a message if you want more clarification on the types of offers you’re submitting.
5. Price Isn't Everything
If you’re househunting, you might think that offering the most amount of money for a house is the best strategy. When actually non-price incentives can really make your offer stand out. Here’s some ideas of what you can offer if your monetary price isn’t top notch (or even if it is!):
- Flexible closing timeline. The seller may be looking for a super quick sale, or maybe they need four months in the home before they relocate to Florida. If you can accommodate their timeline, your offer will shine.
- Larger Earnest Money Deposit (EMD). This is the deposit that is held in escrow once Attorney Review has been conducted, and is the thing you lose if you pull out of the contract without a good reason. A higher EMD can work in your favor; you have more skin in the game, and shows to the seller that you really want this transaction to close seamlessly.
- Rent back period. In a sellers market, non-contingent offers are desirable. So if your seller needs to sell their home in order to buy their next, you can make that process easier for them by letting them live in their ex-home for a certain period of time (i.e. 4 weeks) after you buy it off them, freeing up their funds so they can buy non-contingent. You essentially become their landlord for a short period of time! This flexibility can be super attractive to sellers, and The JFKLiving Team has handled many transactions with rent back periods successfully.
These thoughtful additions can sway sellers in your favor and increase your chances of securing your dream home.
6. Find Your Dream Team
In the challenging housing landscape, having a seasoned real estate agent by your side is your ultimate advantage. Partnering with a top-notch professional who understands the local market intricacies, listens to your needs, and advocates and negotiates passionately on your behalf will navigate you to victory. But that’s not all… you’ll also want to hire:
- a trusted local mortgage lender
- a well-reviewed real estate attorney
- a fastidious title agency
To make it easy for you, start with a real estate agent you trust, and they should be able to provide you with details of their vetted vendors who they’ve successfully worked with for years. With their expertise as your compass, you can confidently navigate the complexities of the real estate journey and unlock the door to your dream home.
