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Buying a house is always a mixture of excitement and stress. You’ll get to find a place to live and/or raise your family for the next several years, which means you can shop around for all the features you want and need—but you might also struggle to find a good deal, or a suitable home in the location you want.
In the current real estate market, prices and buying opportunities are thriving. In many high-demand areas, homes are selling the moment they hit the market, and in many cases, buyers are putting in bids well over asking price to make sure they get their dream house.
If you’re looking for a home in a highly competitive area like this, what steps can you take to beat the competition?
Getting a Real Estate License
If you’re trying to buy a home quickly, this may not be the best option, but if time is on your side and you know you’re going to be buying more properties in the future, it may be in your best interest to obtain your real estate license. Getting a real estate license will help you get first dibs on many homes before they hit the broader market. You’ll also learn tons about buying and selling real estate, and should be able to handle most of your own transactions. Ultimately, this will give you a serious leg-up on the competition, and better deals—though of course, it will also take time and money to get your license in the first place.
Preparing Yourself
The better you understand this area, and the better prepared you are, the better your chances of getting the home of your dreams. You can start by researching the neighborhood. Why is it that homes seem to sell instantaneously? When they sell, do they go for asking price, or above asking price? How far above asking price do they usually go? This knowledge can help you make a suitable bid when the time is right.
It’s also a good idea to get pre-approved for a loan, and in an amount above what you’re actually targeting. When sellers have multiple bids to choose from, they’re always going to favor bids that have lower chances of failing at some point in the transaction. A pre-approval letter is a good sign that you’re serious, and have the ability to make good on your offer.
Adjusting Your Offer
Next, you can take one or more steps to improve your offer, and increase its chances of getting accepted:
- Act fast. People are going to be putting in bids for the property the second it’s available, so the longer you wait, the less likely you’ll be to get the property—or even get noticed by the seller. Obviously, this is a big decision you shouldn’t rush, but you also don’t want to needlessly hesitate.
- Offer more money. The obvious way to get your bid to the top of the pile is to offer more money. If you have the budget for it and if the homes in this area are worth it to you, consider offering asking price or even above asking price. Your research and/or your buying agent can help inform your calculations here.
- Reduce your contingencies. In non-competitive areas, it’s common for buyers to include contingencies in their offer, such as demanding various small fixes or including extras in the sale of the home. However, if you want to be more competitive, it’s better to leave these contingencies out altogether.
- Make a cash offer (or a bigger down payment). Sellers want to minimize paperwork and maximize the chances of the sale going smoothly. Making an all-cash offer, if you can, is one of the best ways to do this. If this isn’t possible, you can make yourself a more appealing candidate by offering a higher down payment.
Broadening Your Criteria
It’s fine to actively look for your dream house, even in a competitive area, but if you’ve tried for several months and still can’t find anything, it may be a sign you need to compromise on some of your desires.
For example, there are probably some hidden gems in the neighborhood that may require some extra TLC, but are still good deals, considering how in-demand the area is. You may also consider looking just outside the neighborhood, at other close areas with similar (but lower-cost and less-demanded) properties.
It’s possible to make a successful bid on a home in a highly competitive area, but it’s definitely going to be challenging. Make sure you understand the risks involved, and the compromises you might have to make, before you proceed—and set realistic expectations for yourself along the way.
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This content is sponsored by Larry Alton.
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Photo credit: Shutterstock