As the housing market heats up, record-low inventories are bringing new challenges to this year’s crop of spring homebuyers. With few properties available and lots of competition, would-be purchasers need to prepare ahead of time to make sure they can snag their favorite property — without overpaying for it.
This seller’s market is the result of strong housing demand and low supply levels. At the end of January, Utah had the fewest number of homes for sale on records dating back to 2003. This extended to Northern Utah where competition for homes was among the highest in the state.
In fact, based on the ratio of sales to available properties, Davis County is currently the hottest market in the state right now. Meanwhile, Weber, Cache and Box Elder counties come in fourth, fifth and sixth, respectively.
With Northern Utah markets clearly leaning in favor of sellers, buyers will want to come to the table prepared. Otherwise, there’s a very real chance they could lose out on their dream home.
Buyers can use the following tips to help weigh the scales in their favor.
Work with a Realtor
Local Realtors know the market intimately. They can help buyers know what properties are bargains and those that are overpriced. They know how quickly homes are selling and whether they sold for their asking price. All this information will help buyers know how strong to make their offer, perhaps even making an above-asking-price agreement if the data back it up.
If the market is ultra-competitive, Realtors can help buyers make an offer that will stand out. Should the seller receive multiple offers, Realtors can also guide buyers through the complicated bidding war situation.
Visit with a mortgage lender
Before shopping, buyers will want to visit with a mortgage lender to determine how much they can realistically pay for a home. A mortgage lender can also provide a pre-qualification letter. Buyers can present this document with their offer so the seller knows they are serious purchasers who can afford the home.
Some buyers may want to take an additional step and get pre-approved, which shows an even greater commitment and makes an offer even more competitive. This will also shave some time off the closing process once buyers secure a contract on a home.
Be careful with bidding wars
While buyers may end up paying more for the home of their dreams simply because prices are headed up, they’ll want to avoid overpaying. Sometimes buyers get too focused on winning a bidding war and go out of their price range. Before emotions get involved, buyers should know ahead of time the maximum price they are willing to offer.
In a hot market, sellers are looking for buyers with the greatest likelihood of completing the sale. That’s why buyers may want to consider dropping any contingencies, such as making the sale dependent upon whether the buyers can sell their current residence.
The seller may also need to finalize the sale by a particular date or may have other timing needs. Buyers who are flexible with the various contract deadlines may find themselves with the upper hand.
Make the earnest money count
Buyers can show sellers they are serious about purchasing the home by putting down a substantial amount of earnest money. Should the sale fall through, buyers will lose that money, except in cases where the contract allows a cancellation without penalty. This shows the seller the buyers have a lot to lose if the deal doesn’t close.
These are just a few tips to help buyers navigate the competition this spring. Buyers, sellers and homeowners can learn more about housing market conditions in their own areas by contacting a local Realtor. A directory of Northern Wasatch Realtors is available at NWAOR.com.
Northern Wasatch Association of Realtors