6 Major Mistakes Buyers Make In A Seller’s Market

March 5, 2018 | Jen Hellmich
When you’re looking for a home in a seller’s market, you need a plan in place to avoid making mistakes. By Laura Agadoni 

The real estate market often fluctuates, making it tough to predict  whether the market will favor buyers or sellers when it’s your turn to  buy. Buyers in a seller’s market can get what they want, but they need to bring their “A” game and be decisive. Here are six common mistakes and how to avoid them.
  • Not making your best offer
The motivation to buy what we want for as little money as possible is  deeply engrained in us. So when most people see the listing price of a  home, they naturally wonder what they can really get the house  for. Offering lower than asking price is a reasonable strategy,  especially if the house is overpriced compared with other similar homes  in the area, or if it’s a buyer’s market with lots of available  inventory. But trying to get a deal when you’re in a seller’s market  might not be the best tactic. “In a seller’s market, many buyers do not  step up with a strong enough offer,” says David Dubin,  a New York broker. “There is usually a shortage of inventory, and the  competition is usually fierce. I always encourage a buyer to come in  with a strong opening offer.”
  • Over-Analyzing the Purchase Price
Just as impulse-buying a home is risky, over-analyzing a home  purchase in a seller’s market is ill-advised as well. When you wait too  long, “You are at high risk of losing [the home] you have fallen in love  with,” says Dubin. Once you’ve determined the type of home you want,  the location you desire, and your price range, and finally find a home  that meets your qualifications, don’t wait to make an offer.  To give yourself more leverage, be prepared to move quickly by having  your finances in order — get a preapproval. “Know how much you can truly  afford, repair any credit issues, have your down payment in hand, and  delay [other] major purchases,” says John Lazenby, president of the Orlando Regional Realtor Association in Florida.
  • Working with an inexperienced agent
In a seller’s market, it benefits buyers to get all the help they  can. If you have a seasoned agent on your side, you’ll probably have a  better chance of getting the home you want. Plus, in most cases, buyers  don’t pay real estate agents; sellers do. “When you are competing  against other buyers in a fast-paced market, it is vital to be  ‘offer-ready,’” says Michael Holt,  a New York agent. “Working with a real estate professional saves tons  of time and stress, as they know the ins and outs of the process and can  provide tremendous insight regarding upcoming inventory.”
  • Not being prequalified (or better yet, preapproved) for a loan
You might know that you’ll be approved for a mortgage loan  based on your steady income, your low debt-to-income ratio, and your  high credit score — but the seller probably doesn’t know that. The only  way to prove to the seller that you’re a qualified buyer is to be  prequalified from a lender. “Prequalification is absolutely paramount,”  says Teka Klopfenstein,  a New York agent. “A buyer has zero advantage if they do not have the  cash to purchase without a mortgage and haven’t taken the time to speak  with a lender.” Not getting prequalified, she says, “sends a message to  the seller that the buyer will lag on getting their ducks in order and  aren’t taking their house hunting seriously.”
Prequalification means that you simply told your lender your financial story. Preapproval involves submitting a mortgage application, complete with providing  verifying documents. “Preapproval from a reputable lender is key,” says  New York agent Ryan Stenta.  “Presenting this shows the seller that the buyer has already set the  wheels in motion and is serious about making [the deal] a reality.”
  • Not being prepared for a bidding war
If there is ever a time when a bidding war could  be imminent, it’s during a seller’s market. No buyer wants to be  involved in such a battle for fear of possibly going over budget. But  broker Michael Holt presents this solution for buyers: “Set your search  below your max budget to leave room in case of an over-asking bidding  war.”
  • Not learning from your mistakes
There’s no shame in learning that your offer has been declined, but  it’s easy to get frustrated if your offers are declined repeatedly.  Learn from your last transaction(s) so you can move in to your  dream home. Stenta says that buying a house, particularly for first-time  buyers, is a lot like dating. “You probably have to let a few keepers  slip through your fingers, have a couple sleepless nights over it, and  then come back with serious intent to lock up the next greatest  opportunity in front of you.”

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