There’s no denying that buying in a hot housing market presents a new set of challenges. You’ll have to contend with elevated costs and competition from other buyers. But, if you know what you’re doing you can still come out ahead. Read on to find out how to effectively navigate a hot housing market and close the deal.
Housing Markets — Hot and Cold
When housing demand outstrips supply on the market, more buyers have to compete for fewer houses, we call this a hot market.
The actual mechanics behind this are a little more complicated, but you can think of it as another application of the law of supply and demand. When there isn’t enough property moving on the market to meet demand, this puts pressure on the existing supply. Because the houses sell faster and can demand a higher price in these conditions, this is also a seller’s market.
The opposite situation, a buyer’s market, is the exact inverse of these conditions. The housing market cools when demand is low and there are a glut of properties available to meet that demand. This means buyers have more options, wider windows to negotiate, and can negotiate better prices.
Is The Market Hot?
The Covid-19 pandemic had two big impacts on the housing market. One, it put a serious squeeze on supply by slowing global production and disrupting supply chains. This means fewer new houses were under construction. Second, it nudged consumers toward buying more houses. Following the law of supply and demand, this is a historic recipe for a majorly overheated housing market.
While the market may be hot, this doesn’t mean buyers can’t get ahead if they’re ready to do their research and put in the work. Read on to find out how you can close on your home, even in a hot market.
How to Navigate a Hot Market
Let’s get into how you can tackle a hot market and come away on top.
Do Your Own Market Research
Don’t be afraid to keep tabs on what’s going on in your local market. Real estate website listings can tell you a lot about the market in one neighborhood or another. Pay attention to how much time elapses between listings first appearing and when they receive a pending contract. If it’s not very long, that means houses are being snapped up and it’s an especially hot market.
If you’re flexible on location, you can focus your efforts on neighborhoods that aren’t quite as fiercely competitive for better chances of success. This type of window shopping also has the advantage of introducing you to how homes are presented for sale. You can get a broader sense of how houses are arranged for sale, neighborhood prices, and which features matter to you.
Find a Great Real Estate Agent
In a hot market, it’s all the more important to have someone guiding you that you can rely on. Good agents are attuned to the market, keep their eyes open for new listings, and know how to make a compelling offer for you. Vet your agent and be choosy. Don’t forget to ask for references from satisfied clients.
Arrange Your Finances Ahead of Time
In a hot market, houses move fast and you need to be ready to move with them. Having a preapproved mortgage will give you an edge by inspiring confidence in sellers. If there are multiple offers on a house, sellers may not be interested in ones that may not even hold through the closing process. Ensure that the incidentals are covered, and get your mortgage pre-approved before you make your approach.
Buyer Success in a Seller’s Market
While the challenges are there, smart buyers won’t find the seller’s market to be an impassable obstacle if they’re willing to practice patience along with these tips. Don’t become discouraged when success isn’t overnight, and you will ultimately prevail. If you’re ready to get started on the road to closing your home, reach out to the experts at Clarion Title. We’ll give you the help you need every step of the way.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.