The housing market is hot. On fire, actually—and it doesn’t seem to be dying anytime soon. This can be scary because of how tough it is to buy a home in a competitive market.
1. Do Your Pre-Approval Homework
Before you even start looking at actual homes, head on over to a lender and get a pre-approval letter. We know it’s not very exciting, but it just might save you later. Don’t bother getting pre-qualified because it’s not the same thing as getting pre-approved. Pre-qualification is a quick process based only on information you provide; it isn’t verified by the lender. Pre-approval requires lenders to verify income, credit, and other important numbers that indicate how much of a home you can afford.
As you can imagine, a pre-approval letter holds a lot more weight with home sellers because it means a lender believes you can afford the homes you’re looking at. This piece of paper might be the thing that gets you a home instead of somebody else. If there are several offers on a property, those who don’t already have financing could be tossed out immediately.
We can help you with the pre-approval process as we have an in-house mortgage broker with Dominion Lending Centres National Ltd. available to us.
2. Get The Right Agent to Help You Buy a Home in a Competitive Market
We might be a little bit biased, but it’s still true. You need a great agent to represent you when you’re planning to buy a home in a competitive market. Be sure to get recommendations from friends and family. Even online reviews can give you a good idea of who might be a wise choice, though you should always take reviews with a grain of salt. Most importantly, find an agent who specializes in the area you want to buy in. Their inside knowledge can put you on the fast track to success when you buy a home in a competitive market.
3. Know Exactly What You’re Looking For
You’re going to have to be ready to make big decisions fast. See a house you want? Trust us, there isn’t going to be time to think about and come back and then make an offer. Want to arrange for your grandma to see it? Want to go back and measure to see if your king-size bed will fit in the master? There isn’t going to be time for that. That said, we’d never want you to buy a house that isn’t the right fit for you. This means that you really need to narrow down what you’re looking for and why before you’re ready to make offers.
This will help you make quick decisions when you come across a home that might be right for you. And be sure to look at the home carefully to make sure that it’s worth what you’re planning to offer. If possible, check out homes in your desired location several months before you’re ready to buy. This will give you a good idea of the kinds of homes that are available in your area, helping you narrow down what's right for you. A realtor with local expertise can help you understand how much the kind of home you want, and in the neighborhood you want, is going to cost.
4. Be Faster Than Everyone Else
What about realtor.ca and all the other real estate websites out there? As fun and useful as they are, these sites aren’t going to cut it when you want to buy a home in a competitive market. You need a local agent to notify you as soon as a new home is on the market, via email or some other method. realtor.ca and other real estate sites all get their data from the local MLS. They pull data multiple times a day, but your local agent will have data instantaneously, meaning you could see a new house before anyone else. Once you’ve found your home, put in an offer right away. Have your negotiating strategies ready (an agent will be happy to help you figure these out in advance). Know how high you’re willing to go in a multiple offer situation. An escalation clause can automatically put your bid at $1,000 higher than any other bids—but make sure you know when to stop.
5. Be a Nice Buyer
Show the seller that you’re going to make life easier for them. They don’t want this home-selling thing to drag on any longer than it has to. Make sure you:
- Schedule a home inspection right away
- Offer to rent the house back to the seller once you own it (called a rent back agreement, these can be tricky, so make sure you know what you’re doing). The seller doesn’t want to be homeless and is likely going to have to buy a competitive market also
- Don’t be afraid to write a letter to the seller if you feel like it will make a difference, which it can to some sellers
- Last, a good agent will call the listing agent and find out what’s really important to the seller so you can put together a great offer
6. Think About Contingencies
Contingences are par for the course, but they may not get you very far in a competitive market. If you’re planning to sell your home before you buy this one, you’re probably not going to get very far. You also might think about forgoing a home inspection contingency, but we NEVER recommend this. You could be on the hook for thousands of dollars’ worth of repairs if something unseen is wrong with the house. An agent can help you figure out if and when it’s smart to go without contingencies in a competitive market.
Hang On—It’s Going to Get Bumpy
It’s better if we tell you up front that it’s going to be a bumpy ride. If you need any reassurance that it’ll all work out okay in the end, that’s what we’re here for! We’ve been through these complicated transactions many times, and we’ll do everything we can to help you through it. You’re also likely to miss out on homes a few times, and that’s okay, too. You’ll learn more about the market with each situation that doesn’t work out, and you’ll learn how to make a better offer the next time a great home comes around.