Buyer Strategies (for Winning in a Sellers' Market)

A quick word on the current housing market

When the market is favored towards buyers, there will be plenty of homes for sale, and they’ll sit on the market for a few weeks (or even months) before going under contract. Buyers and sellers can negotiate on home repairs and upgrades, and reasonable offers will generally be accepted.

When the market is favored towards sellers, there are very few homes available for sale (relative to the number of buyers). Homes sell quickly, with ‘hot’ homes getting multiple offers in a few days. 

A balanced market is when there is somewhere around 6 months’ worth of inventory available for sale. (This metric indicates the current supply of homes for sale relative to the average number of homes sold per month. If no new listings came on the market, how long it would take to have 0 homes on the market at the current rate?)

At the time of this writing, housing inventory in Whatcom County is at an extreme low. In Bellingham, we have 0.49 months’ worth of inventory. Across Whatcom County as a whole it’s at 0.76 months’. We’re not only in a sellers’ market - we’re in an extreme sellers market. 

What this means is instead of multiple offers, ‘hot’ homes are the site of bidding wars. Stories of 10-20 offers, many of them cash, escalating home prices to $100,000 to $200,000 over the list price is becoming a relative norm rather than a legendary tale.

This isn’t meant to discourage you; we believe that you’re in a stronger position when you enter the real estate world fully informed and with your eyes wide open to the realities of the current situation. 

What you can do: strategies for success

Know what you’re looking for.

It’s critical that all decision makers are in alignment on your “needs and wants” lists. What are your dealbreakers for location, school district, age and condition of home, bedroom count, and so on? What are you willing to fix later on, and what is an automatic no? 

Keep your financing up to date. 

Getting preapproved is the first step. After that, it’s important to keep your lender updated on any employment or income changes. You may need to continue submitting paystubs throughout the process, so keep those readily available.

Shop below your budget.

When homes are selling for $50,000-$100,000 over asking price, it’s wise to have escalation space built into your budget. Talk with your agent about what’s reasonable for your financials, so that you’re looking at homes that fit your situation. 

You see a home you like? Take action.

Gone are the days of seeing a home on Redfin or in your email and thinking about it for a few days before calling your agent and scheduling a showing. Today, the proactive buyer is the one that’s more likely to win. 

When a new home pops into your inbox, here’s what you can do to stay ahead of the game:

• Check it against your needs & wants list
• Read through the whole listing and look through all the photos
• Check the location on Google Maps (and verify the school district, proximity to grocery stores, your potential commute, etc)
• View the listing video or 3D walkthrough if available, or at the very least check out the Google Streetview of the area. 

Call or text your agent right away if you’d like to tour the home, and give us a list of available timeblocks so we can claim a showing timeslot without a lot of back and forth (in this market we’ve lost optimal showing choices in just the time it takes to text a couple of scheduling questions). 

Drive by the house.

If you live in the area, drive through the neighborhood and look at the home exterior prior to your showing. If you see any environmental dealbreakers (street noise, proximity to the airport, that sort of thing), let your agent know if you’d like to go through with your scheduled showing.

Have an inspector on speed-dial.

After the showing, it’s go time. We’ll get to work on our end, preparing the offer and talking with the listing agent about the sellers’ preferences on all the little details that can make a big difference, like closing date, extended possession, pass/fail inspection, etc.

Even in a crazy market, it’s nearly always in your best interest to have a whole house inspection conducted prior to closing on your home. So short inspection contingencies and pass/fail inspections are common, and also doing a pre-inspection prior to going under contract. 

Our team will provide you with several options for local home inspectors, and we recommend scheduling your chosen inspector if the seller is allowing preinspections.

**Keep in mind that home inspections are a fee-based service with payment due at time of service. There’s no guarantee that by having one you’ll win out against other offers. It just means that you’re able to either back out of submitting an offer at all if something comes up on inspection, or you can make your offer stronger by waiving the inspection contingency. 

Submit an early offer. 

It’s not a guarantee, but we’ve had some success with submitting a clean, powerful offer as soon as possible - long before the scheduled review date. Some sellers will jump on the chance to have a ‘one-and-done’ situation. 

In this market, the prepared buyer is the strong buyer. These are some of the ways you can stay proactive in your home search and make your bid stand out from the competition.

Escalate. 

Adding an escalation essentially says “if other offers come in higher, here’s how much I’m willing to spend to win this contract.” They’ve become more common in recent months, even though it feels odd to show your hand to the sellers - because aren’t you supposed to be negotiating against them?

Keep in mind that in this current market, you're not negotiating against the seller first; you're negotiating against the other buyers bidding on this home. 

The escalation clause allows you to be flexible on your offer price up to your limit, so you don't lose out in the situations where you were willing to go higher.  (Escalating isn’t always your wisest bet, so as always, your agent will be working with you to help you decide what best fits your needs!)

This is one reason it’s critical to have a solid understanding of your financials and a crystal-clear agreement of your wants and needs, and the ramifications of offering a higher price. So many homes are selling for bizarre prices, that those bizarre prices are becoming justified by the market. 

As with any of our resource blog posts, this is provided for general information purposes only and the advice listed here may not be advisable for your specific situation. This was written in April 2021, during a time of extreme housing shortage and consequent bidding wars; article is written with this context in mind. As always, it’s best to hire a qualified real estate professional to guide you in writing the most competitive offer that fits your specific needs and situation. 

Did you happen upon this blog post by accident? Get to know the Cohen Group NW and connect with us to help you find your next home!