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Home-buying 101: a purchaser’s guide to buying in a seller’s market

Your home is one of the biggest purchases (and investments) you’ll ever make.

It can also be one of the most perplexing, particularly when it comes to buying in a seller’s market.

Should you buy now? Is it better to wait? When’s the right time to get the biggest bang for your home-buying buck? Is there even such a thing as a ‘right time’—especially in recent months? With so much to consider, there’s the potential to develop analysis paralysis when it comes to making any actual decisions.

But no need to worry; our 7-step guide to home-buying in a seller’s market will help show you the way:

1. Don’t wait too long (to make an offer).

Any hesitation in a seller’s market means you’re probably bidding adieu to the property you set your sights on. Then again, as an educator, you should know all about the laws of supply and demand. With more potential buyers than homes in this scenario, you need to be prepared to make an offer and fast.

Tip: When it comes to making an offer, you might be tempted to come in below the asking price. However, low-balling in a seller’s market might not be the best strategy. With a shortage of inventory, the competition tends to be fierce. If you really want that property, come in with a strong offer, right from the start.

2. Position yourself to instantly make an offer by getting a pre-approval.

When it comes to buying a home in a seller’s market, timing is everything (particularly with competing offers on the table). Getting a mortgage pre-approval will send a clear message to the seller that not only are you highly motivated to buy, you’re also ready to close the deal.

Tip: Look for properties selling for $10K to $15K less than the amount of your pre-approval. This will keep mortgage costs comfortably within your budget and give you room to negotiate, should you find yourself in a bidding war.

Keep in mind that a pre-approval does not guarantee that you will get the mortgage loan. Once you have a specific home in mind, the lender will want to verify that the home or property meets certain standards (such as the condition or market value of the home) before approving your loan. If certain standards aren’t met, the lender could decide to refuse your mortgage application, even though you had received a pre-approval for a certain amount.

3. Consider not going into an offer with too many contingencies.

If your offer is fraught with contingencies (i.e. a home inspection, the sale of your own home, etc.), the seller may view these as potential roadblocks to selling. If another buyer has none of those conditions and a similar price offer, chances are the seller is going to accept the one with the least amount of hassle. Instead, carefully review your clauses and remove the ones you can live without. Adopting the whole ‘less is more’ approach will ensure your offer has a fighting chance.

However, be cautious not to sacrifice your peace of mind just to secure a piece of property.

Choosing to waive an inspection, for example, means you’d be agreeing to buy the home, no matter what kinds of problems may exist. This could be a very costly compromise. While flexibility is key to getting an offer accepted in a seller’s market—at the end of the day, you need to weigh just how flexible you’re willing to be.

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4. Be prepared for a bidding war.

When there are multiple offers on the same property, you may find yourself in a good old fashioned bidding war. To be the last person standing, you need to pull out all of the stops (over and above a solid offer price) in order to come out on top.

Ways to come out on top during a bidding war:

  • Include the deposit with your offer: Bringing a certified cheque for the deposit shows the seller that you really mean business. Just keep in mind that if your offer is accepted and you try to back out later, you will most likely lose your deposit. So only go in armed with a deposit if you are 100% serious that this is the ‘home sweet home’ you’re set on.
  • Take an active part in negotiations: Does the seller want you to remove a clause or up the offer? Being personally involved during negotiations is far more effective than simply having your agent represent you. This way you’ll be able to quickly respond to and/or approve any necessary revisions to your offer before the competition has a chance to act.
  • Leave closing dates open: Instead of setting a closing date, leave it blank. Letting the seller choose their own closing date can make your offer look more appealing than the others.

Be prepared to make an offer by getting a mortgage pre-approval through Educators.

5. Set yourself apart from the home-buying crowd by writing an offer letter.

There used to be a time when students would give an apple to their teacher to get in their good graces. The same principle can still be applied if you’re a homebuyer that’s looking to purchase a home in a seller’s market. Except instead of an apple, give the seller a personalized letter attached to your offer.

After all, the seller most likely has an emotional attachment to the home they’re selling.

Maybe they raised their kids or entertained their grandkids there. Maybe both. The offer letter is your way to make a sincere connection with the seller. Share your dreams and goals for your new home-to-be. Tell them how much you love the place and that you’ll be taking good care of it.

These types of letters have been known to be a winning homebuyer’s strategy (and will definitely set you apart from competing offers in a seller’s market).

6. Be open to buying a new construction.

In a seller’s market, you may find the competition too much, or the choices too little.

If that’s the case, going with a new construction could be the solution. While the potential downside is that you’ll have to wait longer to move in—the upside to having that time is that it will enable you to stretch out your down payment (as new builds typically have a deposit structure). In addition, you’ll be able to choose the floor plan and finishes that suit your needs and taste. Plus everything will be new and under warranty. Which means it’ll be less likely that you’ll be doing any renovations or repairs (within the first few years at least).

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7. Stay positive.

This point might seem moot, however, the whole home buying process can be frustrating to begin with. Maintaining a level head will ensure you make well thought out decisions every step of the way.

To sum it all up:

  • Don’t wait too long (to make an offer)
  • Position yourself to instantly make an offer by getting a pre-approval
  • Consider not going into an offer with too many contingenciesBe prepared for a bidding war
  • Set yourself apart from the home-buying crowd by writing an offer letter
  • Be open to buying a new construction
  • Be positive

And remember, while being a homebuyer in a seller’s market can be a challenge—it’s not impossible. 

To ensure you don’t miss out on the property you want, get in touch with Educators Financial Group. From mortgage pre-approvals and specialized advice to insight into the home-buying process, we can help you every step of the way.

Have an Educators mortgage agent contact you so you can be ready to get your offer signed, sealed, and delivered.

How much mortgage can you afford? Use our mortgage payment calculator and find out.


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