The hardest part of the spring housing market is that there are more buyers in the marketplace. There are also more houses and condos for sale. You are more likely to find yourself making an offer when another buyer is making an offer on the same property. People call these “bidding wars”. They are great for sellers. They are hard for buyers.
If you are in a bidding war, remember these key things:
Before making any offer, have an agent give you a comparative market analysis. This will tell you the fair market value of the house or condo, based on what other people paid for properties like the one you want.
Consider that fair market value. If the house or condo is worth more than you want to pay, think again. If there is already competition for this property, it is probably not for you. However, keep track of this house; it might not sell quickly. In that case, you can go back to it without competition.
Consider the property value for your household. Create a negotiation plan based on how much you like this property and how special it is. If this house works particularly well for you and it is a rare type of house, you may be more motivated to go to your top price. If it is a common layout, maybe not. Choose your top price for the property.
Look at how much competition there is. This will change whether you need to offer at your top price first, or whether you can try to get it for less than that. Balance the risk of losing it and the risk of paying too much.
Calculate your mortgage payment for your offer price. Include that property mortgage, including taxes, insurance, and energy costs.
Now promise yourself that you will not go over the top price that you have chosen. There will be other houses for sale! It is a well-known psychological phenomenon that some people will get carried away in a bidding war. Try not to be that person.
In navigating the challenges of a competitive housing market, it’s crucial to stay grounded in key principles. Conduct thorough research with a comparative market analysis, consider the property’s fair value, and align your offer with your household’s needs. Keep a clear negotiation plan, assessing the level of competition and balancing risks carefully. Remember, there will always be other opportunities, and maintaining discipline in your bidding strategy ensures a smart and sustainable approach to securing your ideal home.