Many real estate markets across the United States are currently experiencing low inventory. Several factors contribute to low inventory in markets, but the largest driving factor right now are low-interest rates — buyers want to take advantage of these rates before they rise and are eager to enter the housing market.
However, many homeowners already have low-interest rates on their homes and may not be keen on selling and moving. Navigating a market with limited inventory can be an extra challenge, but it can be done successfully when following this advice:
1- Be Financially Secure
Take the appropriate steps to have your financing secured before you go to look at houses. Get a mortgage pre-approval and have all the necessary documentation ready to send into your lender. Do not enter the housing market until you are fully financially prepared with a solid down payment and a reputable loan. This will help you stand out to sellers when you make an offer on a house.
2- Be Realistic About What You Can Afford
Most homebuyers do not buy the perfect house. The truth is the average home buyer does not have an unlimited budget and therefore must make compromises on their home purchase. Keep an open mind while looking at houses and understand that the goal is to find a home that meets all of your needs and most of your wants. Be open to making changes to a home to create the exact home you are looking for.
3- Avoid Looking at Houses at the Very Top of Your Budget.
In low inventory markets, houses tend to sell over asking price due to competition amongst buyers. Therefore, it is wise to stay away from homes that are at the absolute top of your price range. If you are approved for $350,000 it is wise to look at home $340,000 or less which will allow you to bid a little higher on a house. Also, you won’t fall in love with a house that ultimately, you won’t be able to buy.
4- Put Your Best Offer Forward
In low inventory markets, it is critical that you put your best offer forward. Most likely, you will be competing against other offers, therefore, there typically isn’t a lot of negotiating that goes on.
5- Be Ready To Move
Real estate markets with low inventory turn over quickly. Most buyers and sellers have contingencies on other contracts that restrict the amount of time before they can close. The average contract length is shorter and requires you as a buyer, to be ready to move quickly. Start packing and researching your moving options while you are looking for options, so the moving process is as seamless as possible once you’re under contract.
Purchasing the home you want is possible even in a market with limited inventory. Be prepared and manage your expectations throughout the process and ultimately you will find a home that you love.