During this past month I worked with some buyers who didn’t quite believe me when I tried to explain what the low inventory market meant.
One buyer told me recently that they didn’t think it would affect them that much until they had seen several homes they were interested in go under contract before we could see them and then one which had just been listed show up as under contract that afternoon when we went to see it.
Another buyer also saw more than half of the houses they found online show up as being under contract by the time they got me their list of homes to see.
With the inventory in a 4th consecutive month at below 3 months inventory we are definitely in a very constrained inventory market which means that buyers have to be even more prepared and have to work with a skilled buyer’s agent to be able to have any chance of success.
This does not mean that you should wait or avoid attempting to make a purchase. Those buyers who decided last year to wait are now seeing that was not a good idea.
It does mean that you need to recognize where the market currently is and should prepare and act accordingly.
When searching for a home or condo you will need to have a list of what a property must have, what is must not have and those things you would prefer it to have or not have but which are not musts. As you go along you might make some revisions to your list.
When inventory is low it will be more difficult to get exactly what you want but you should not sacrifice on the features which are must-haves or must-not-haves so it is important that you know what those are before you start searching.
It will also be important to know what you can afford or what you hope to spend before you start looking so that you know what price range to look in. You may be able to find what you want in the range of what you hope to spend but you should also know what you can afford if that is different than what you hope to spend in case you need to go up a little in price to find a home or condo that will be right for you.
One of the most important parts of preparation for buyers right now is to have the financing lined up in advance. Whether you will be paying cash or getting financing, you will need to know what your limits are or where you will be comfortable right when you begin searching. In a low inventory market such as the one we have right now it is more common for the well-priced, nicer properties to sell very quickly so you must be prepared to act quickly when you find a home or condo you want to buy. This means you will need to have proof from your bank that you can afford to pay cash for a certain property or at least a pre-approval letter if you are getting financing. If you have those available when you find a home or condo you want to buy then you will be in a position to act quickly.
Another aspect of preparation is getting your questions answered early on. If you want to know how property taxes are paid, what insurance costs might be, or anything else that you’d need to know to make a decision regarding the purchase of some property – ask all those question right at the beginning so that you don’t have to delay submitting an offer because of questions you could have asked earlier. This can even include going over the paperwork that will be used when submitting an offer so that you will be able to do the paperwork more quickly when the time arises to act fast.
<h3>Set Your Priorities</h3>
If getting a home or condo that you really like is your top priority then when you find the right one you may have to approach negotiating a contract differently than if price is the top priority.
Obviously you want to get the best deal possible and not pay more than you have to no matter what your priority is. However, when inventory is low and the potential for competing buyers is high, you need to be aware of the fact that taking too long to negotiate can result in either losing a property to another buyer or getting into a situation where you are having to submit your highest and best offer which could mean you end up paying more than you would have if you had negotiated quickly.
This is one of the steps where you will definitely need an agent representing you who knows the optimum way to submit and negotiate an offer as well as how to win when there are competing offers. It’s best not to learn this the hard way, get someone with the right kind of experience to help you.