Whether you’re months deep into the house-hunting process or you’ve just heard stories from the frontlines, you’re probably aware that the Minneapolis housing market right now is a seller’s paradise. Homes are selling almost as quickly as they’re put on the market, especially homes near the city that are listed for $400,000 or less. To make a successful offer on a home in this climate, you need to know how to be a savvy buyer in a seller’s market. Julie and Daniel paid a visit to Twin Cities Live a couple weeks ago to share their top five tips for buying a home in a seller’s market.
5 Tips for Being a Savvy Buyer in a Seller’s Market
1. Work with a realtor who can get you into houses quickly.
If you’re committed to finding and buying a home, you need to be prepared to go see homes the day they’re posted—and you need to work with a realtor who can set up those same-day showings. If you wait until even the very next day after a property is posted, the home may already have sold. In this market, committed buyers need a realtor who’s ready to answer the phone and set up showings as fast as homes are listed. A good realtor will get you in the door of a potential home in as little as one hour after it went on the market.
2. Get pre-approved and find a good lender.
When you find the house of your dreams, you need to act fast to make an offer, and that means having everything as ready to go as possible ahead of time—getting pre-approved and finding a reputable lender. If you find your dream home on a Saturday morning, you need to know that your lender will pick up their phone and send over your pre-approval letter that same day.
When you’re first interviewing potential lenders, make sure to ask when they’ll pick up their phone. You need to be able to trust that you can get ahold of them when you’re ready to act, even if it’s 7pm on a weeknight. Your lender’s reputation can also make a difference with sellers, so choose a reputable lender with a good track record for getting loans done and closing on schedule.
3. Include an escalation clause.
In your search, you may find a house you love that you think is worth more than its listing price. You don’t want to pay more if you don’t have to, but if you’d be willing to pay above asking price in order to get the house, you should include an escalation clause in your offer. An escalation clause will automatically raise your offer by a certain percentage (typically 1%) above any other non-contingent and pre-approved competing offer, up until a specified limit.
4. Write a personal letter to the sellers.
In this market, it’s not uncommon for a seller to receive as many as a dozen offers in a short span of time. One of Julie and Daniel’s favorite tactics for making your offer stand out is to include a personal letter from you to the sellers. Take the opportunity to lay out your family story—who you are, what you love about the house, what attracts you to the neighborhood, etc.
A personal letter can really make a difference with sellers. They like knowing that their beloved house will be loved and cared for by another family after they move out. A home is a very personal thing, and it can often feel jarring to treat its sale like pure business when for the seller it represents so much more. Including a heartfelt letter with your offer can add a personal element back in to what would otherwise be an impersonal business transaction.
5. Pay your own closing costs.
Closing costs confuse a lot of sellers. When you ask a seller to pay your costs, you’re ultimately financing those costs into your offer anyway. So just simplify the whole process by handling the costs yourself and giving the seller a clear, uncomplicated offer to consider. The cleaner and more polished your offer, the better.
Watch the whole Twin Cities Live segment, including some tips for selling and staging your house, in the video below.