If you are on the search to find your dream home in the San Diego market, you may be feeling a bit nervous about the residential real estate future as homes are quick on the market, and often sell over asking price with multiple offers on the table. As a buyer, you have the option to wait until the market shifts to a higher supply and lower demand as it inevitably will, but then the APR % rates could increase leaving you with significnatly higher monthly mortgage payments. Well, here are some tried-and-true strategies that can help tilt the odds in your favor, and make sure you become the most desired buyer in a multi-offer scenario.
First, is it a Seller's Market or not?
If you already have an idea of where you want to live, you'll want to determine if an area is truly a seller’s market, which will help you better gauge how competitive buying your dream home will be. To do so, according to realtor.com you'll want to answer the following questions:
- Are houses selling above asking price?
- Are quickly are homes selling?
- How much inventory (homes for sale) is available in my desired location?
Do some research for listings in your area or work with your REALTOR® to decide if the factors noted above seem to be true. If you can check yes to all, you need to be prepared to work within a competitive market as in this state, the supply of homes is low, demand is high, and sellers are likely more in control.
1. Get That Pre-Approval
In hot markets, talk is cheap. To be taken seriously to seller's, you'll want to show up with hard evidence proof of a mortgage pre-approval letter, plus a “proof of funds” form from your bank showing you have enough to cover the down payment. That way, the seller will know you have a serious interest in the property. Not sure how to get this accomplished? You'll need to visit a mortgage lender and they will evaluate what type of home you can afford based on your FICO credit score, funds available for a down payment, current debt, income and various other details. To get started, reach out to me directly or check out my preferred lender Greg over at HomeServices Lending to setup an appointment.
2. Go Easy On Em'
Usually, when home-buyers make an offer, they will do so with contingencies. For example, they’ll buy the home if the inspection goes well or if they can obtain financing. But in a competitive market, you might find it valuable to drop one or two of these contingencies in order to stand out to sellers, who will likely prefer as few obstacles as possible on the way to closing. Talk with your REALTOR® on the implications associated with this approach as you want to make sure the benefit will outweigh the risks.
3. Don’t Play Hardball
In a typical home-selling situation, buyers can begin by making an offer below the seller’s asking price, then negotiate upward. But in a competitive market, there’s often little to no room for price negotiations. In fact, if there are multiple bids, you could end up paying well over the asking price. So don’t waste time low-balling a seller. Always try put in an aggressive offer, without overextending yourself financially.
4. Widen your search
In a competitive market, it’s not unusual to feel out-priced of your favorite neighborhood. So consider scouting elsewhere, like in an up-and-coming area near by. As San Diego is constantly evolving, you never know if there is a neighborhood around that could be your perfect fit, you just have yet to find it. Checkout this comprehensive list from San Diego Magazine on the 31 Best Places to Live to get you started.
As always, the best way you can find all of this out, is to work with a professional real estate agent that can guide you through the entire process based on your specific need. He or she is trained to recognize the characteristics of a given neighborhood, city, or ZIP code to ensure you find what it is you're looking for, within your price range.