Tips for Buyers in a Competitive Seller’s Market

The 2020 Los Angeles housing market was marked by a surge in buyer demand for larger homes, along with low housing inventory and record-low mortgage rates. As remote working continues into 2021, buyer demand remains strong. The strong seller’s market has been challenging for buyers facing bidding wars amidst increasing housing prices. Here are some of my top tips for buyers: 

Anticipate a multiple buyer situation.

The first step is to know what you can afford, and decide how much you are willing to spend. In a bidding war situation, winning offers often have the highest offer price. Many buyers will pay a premium to be the winning bidder and “get the house”. Buyers should speak to their lenders to determine a realistic budget, receive a pre-approval letter, and decide how much they are actually willing to borrow and/or stretch. 

Identify your must-have features.

Back yards, additional bedrooms, an open floor plan, a kitchen island, certain schools. What features are must-haves for you? Are you willing to live closer to a busier street if that means gaining extra bedrooms? How important is it that the house is move-in ready? Focusing on absolute must-have features helps buyers decide which homes are worth seeing and placing offers on. It also helps buyers feel in control of the home search process, rather than discouraged or overwhelmed by the flurry of bidding activity by other buyers.

Be ready to make bold moves.

Some buyers will prefer to stay away from bidding wars, focusing instead on finding hidden value in houses that have been on the market for a while. Regardless of strategy, buyers should be prepared with down payments and pre-approval letters, ready to submit a competitive offer when they find the right house. Buyers should also be prepared to make their offers as seller-friendly as they feel comfortable, especially through the reduction of contingency periods or even removing contingencies.

Stay tuned for another post on buyer contingencies and how buyers can use them to create competitive offers.