In the current state of the real estate sector, it has become increasingly difficult to house the growing population. The demand for housing, both to rent and buy, has outpaced supply. This imbalance has led to prices climbing high, intensified homebuyer interest and fierce competition between potential buyers. The seller also has more leverage while negotiating a deal – hence, creating a ‘seller’s market’.
With the right approach and strategy, you can easily navigate a seller’s market and position yourself ahead of other buyers, without having to pay more than you can afford. Graana.com, Pakistan’s smartest property portal, has given some tips below.
Sort Out Your Financing First
Since houses don’t remain on the market for long, you are required to act fast. You cannot ask the seller for more time to figure out your budget first before closing a deal. Your budget needs to be set beforehand so that, even if you try to counter-bid another potential buyer for a property at some point, you would know what your limits are (and don’t get into debt instead).
This also gives you an extra advantage because sellers prioritise those who are willing to pay more readily and quickly.
Narrow It Down
If you have to close a deal fast, you first need to know if a property is the right fit for you or not. To help you decide, make a list of the features you prioritise in a house (these can also be your deal-breakers), and those you can compromise on. For example, this can include the location, the number of bedrooms and bathrooms, the estimated time for your daily commute from your workplace/children’s schools, or any other personal or family needs. The different features offered vary with factors like location, type of property etc. For example, houses for sale in Islamabad may have their own unique amenities compared to any other city.
When you find a property that completes the criteria, you would not have to be in a position where you second guess your decision about moving forward.
In a seller’s market, you need to be prepared to accept what you are being offered. You are more likely to be put in a position where you would need to make some compromises. However, don’t get hung up on a feature and ruin your chances of getting an otherwise perfectly suitable property. For instance, if you are looking for a modern kitchen with new fittings and high-tech appliances, you might have to give it up just to stay in the neighbourhood of your choice.
In such cases, it is important to widen your horizons. Being flexible would open up opportunities that you might not have considered before – after all, you would not know what is in the market if you don’t step out of your pre-determined boundaries.
Just remember that cosmetic problems with a home can always be changed (e.g. floorings, kitchen countertops etc.); it is the structure that matters first.
Be Readily Available to the Seller
Again, timing is key in a seller’s market. With an influx of buyers, you have to make your move at the right moment, before it is too late. Hence, it is essential that you are open for communication with the seller and are prepared to make an offer at a moment’s notice, as there is no guarantee that a house available today is still an option in the market tomorrow.
If you have not heard back from the seller in some time, contact him/her yourself and ask for updates. When they reach out to you, make sure you respond on time. If they have asked you to arrive for a house tour at a certain date and time, fulfil that commitment. Be available at the seller’s earliest convenience, not your own. This will also help build rapport with the sellers, and you may end up being favoured among other potential buyers.
However, it is important to note that you should not be forced to make any hasty decisions just because time is cutting short. Buying a house is a long-term investment and you need to be sure of this decision in every aspect before finalising the deal.
Don’t Play Hardball
Unfortunately, a seller’s market gives little control to homebuyers. While there may still be some room for negotiations, enter the discussion with little expectations. A seller would be receiving more than one offer at a time, so they would not hesitate in rejecting your offer altogether if they feel like you are not being flexible. You need to follow the seller’s lead, and if you get a counter offer, be sure to consider carefully and proceed accordingly.
Put in a strong offer that is within your limits though. Don’t be tempted to outbid the competition, even if it delays the sale of the property. People are more likely to pay above the listing price due to the worsening supply shortage, but only bid what fits within your budget. Getting the right house at a later stage than expected is better than getting the wrong one right now.
Cash offers can give you an edge over other potential buyers as they eliminate the risks that come with loan payments. For instance, if the buyer’s financing falls through due to some reason, the seller would be left in the lurch and would have to list the property again.
Bring Your Paperwork Beforehand
If you are serious about a particular property, assume other potential buyers are too. Take steps to show the seller how committed you are. One way to do so is by letting them know you have secured the funding needed to close the deal. Whether it is proof of funds (or your financial security), an approval letter from your lender, or even supplemental paperwork, bring all the necessary documents before the seller asks for them, to show how prepared you are.
Hire a Real Estate Agent
It is a real estate agency’s job to serve every person seeking a home, in any area, at an affordable price. An agent can help walk you through the process or find prospective properties that may have slipped under the radar. When you are in a niche market especially, you need a local professional that knows the area. During a time when houses are astronomically expensive, you can rely on an agent who can work within your budget and offer you the right space, community and amenities.
The real estate sector is constantly in flux, and conditions can change rapidly. It is important to know the dynamics before entering the market so you are aware of what you would have to deal with. It is especially imperative for those searching for properties in major cities, where demand is even stronger, for instance, if you are looking for houses for sale in Karachi. For more guidance on the homebuying process, visit Graana.com.