Think a sellers’ market is bad for buyers? Think Again.
When a bad thing can be good.
This isn’t going to be one of those “exactly what you think” type of posts. I know it's definitely difficult to buy a home in a sellers’ market. That's the point of it. You’re going up against multiple offers, typically over asking, and are forced to get creative to win. What I’m trying to say is that there is still hope, depending on the type of buyer you are. Don’t exactly know? Let's figure it out.
Buyer Number One: The Cash Buyer
The cash buyer is basically the bully on the playground. Good for you guys. We get it, you can go over asking. Super cool. In all seriousness these buyers mean business. They’re looking to make money by spending money. In a sellers’ market this gives them a distinct advantage in lower price ranges like the $200-$300’s. Most buyers in this price range are here because they don’t have the ability to go higher so when the home goes over asking the issue of appraisal gap gets raised and they get pushed out.
Buyer Number Two: The Underdog
This buyer is the one usually having the most trouble in a sellers’ market. Typically, underdogs are younger first-time home buyers or buyers choosing to go with an FHA loan to increase their overall purchase price. These buyers have even been known to use old school methods like carry-back loans from the seller to bridge gaps between appraisal and purchase price. All hope however is not lost. This is when your Realtor really earns their paycheck. Finding homes off market, writing strong offers, knowing what sellers are looking for and doing more than just sending emails. These guys exemplify the saying "teamwork makes the dream work."
Buyer Number Three: The Upgrader
The Upgrader would get a bronze if “easiest to buy in a sellers’ market” was a competition. The upgraders are buyers cashing in on equity increases and possible life changes like a promotion or raise. These buyers are taking advantage of the market growth almost better than any other type of buyer. Buying homes years ago for a third of their current value. Still these buyers may not be able to throw cash around like a bully. They are looking to buy a home to enjoy for years and will want to pay for bigger homes or more exclusive amenities. Think near a country club or golf course.
Buyer Number Four: The King of the Castle
I decided to go with king of the castle because this buyer is really taking advantage of the market. Whether it be purposeful or circumstantial these guys are doing it right. How so? These guys are usually downgrading or moving outside of the hottest parts of the market and getting more bang for their buck. Kids out of the house and you want less space but a new kitchen? You’re in luck. Sick of all the young people moving into the neighborhood? Look, condos with no yard maintenance for 200k less than your homes value. The reason I put these buyers as the king isn’t because they have cash to go well over asking but because they are truly taking advantage of current market conditions. As a Realtor I can’t help but respect anyone who can turn any market into the perfect market for them. It’s the challenge that keeps us in the game.
Now that you have a better idea of what type of buyer you are you can make a better decision on getting into the game or not. While this may not have cleared up all your questions I do hope you’ve found it helpful.