How to Win in a Competitive Housing Market

Entering the housing market for the first time can be an exhilarating experience, especially in a competitive market. First-time homebuyers often face a steep learning curve, dealing with bidding wars, high prices, and the fast pace at which properties are bought and sold. Your RE/MAX agent is your most-valuable resource in navigating this process, but in the meantime, here are some tips for first-time homebuyers to not just compete but win in a real estate market where every advantage counts.

How to Win in a Competitive Housing Market

Tackling a competitive housing market as a first-time homebuyer starts with thorough financial preparation. First, start by saving for down payment and create a “home owner budget.” A tip is to put aside the amount you expect to pay as a monthly mortgage payment, into a “down payment savings fund.” This will give you a rough idea whether you can realistically carry the mortgage alongside other expenses. If you feel stretched, that’s an indicator that you need to scale down your purchase price.

Also consider the other costs of home ownership, such as property tax, home insurance, maintenance, condo or strata fees if applicable, and more. Mortgage calculators and budgeting tools are readily available online, to help test your budget based on different home prices, down payment amounts and interest rates.

Getting pre-approved for a mortgage can also strengthen your position at the offer table. This involves a lender reviewing your financial history and determining how much they would be willing to lend you. A mortgage pre-approval helps you set a realistic budget and shows the seller that you’re serious about buying a home.

Choosing an experienced real estate agent can make all the difference when negotiating an offer. Choose someone who brings a wealth of local market knowledge, including neighbourhood dynamics, price trends, and in-demand (or undesirable!) features in a home. An experienced agent can significantly enhance your chances in a bidding war through strategic advice and clever negotiation tactics. They might also have access to off-market listings or upcoming properties that aren’t widely known, broadening your options and improving your chances of finding the right home before others find it.

A good real estate agent should be able to explain complex processes in understandable terms and anticipate the typical concerns that new buyers may have. Effective communication is key; your agent should be able to provide quick updates and be responsive to changes in the market or your personal circumstances.

When you’re ready to make an offer, you can review a comparative market analysis (CMA) provided by your real estate agent that details recent sales of comparable properties in the area. Offering at or above the asking price is common in hot markets, but the overall attractiveness of your offer can also hinge on other terms, such as:

• Minimizing conditions related to financing, inspections, and appraisals, especially if the seller is eager for a straightforward, quick sale.
• Increasing your earnest money deposit.
• Flexibility with the closing date and accommodating the seller’s timeline.

Understanding the seller’s motivations can help give you an edge over the competition. For instance, if the seller is relocating soon for a new job, they may value a faster closing over a higher offer. In such cases, readiness to expedite the process, coupled with a personal touch like a heartfelt letter expressing your connection to the home, can make your offer stand out.

It is common for a home to have multiple offers, especially if it is a hot market or the home is in a desirable neighbourhood. It’s important to enter these situations with a clear maximum budget to avoid overpaying and becoming house-poor. Your real estate agent can provide updates about the status of the property and insights into other offers that might be on the table.

In cases where multiple bids are expected, it can be effective to submit your best and final offer right from the outset. This demonstrates to the seller that you are serious about the purchase and can help minimize prolonged negotiations. But sometimes, it’s the non-price elements of an offer that make it stand out. Flexibility on closing dates or a willingness to waive certain conditions can make your offer more attractive than another that might be slightly higher in price but less accommodating.

For access to real-time market data, extensive networks, and expert negotiation skills, connect with a RE/MAX agent to start your search and close the deal.