By Dan Bergman
In a competitive housing market, homes sell fast, often within a day or two. To succeed in purchasing your dream condo, you’ll need to move quickly as well. While that may sound intimidating, there are several steps you can take to make sure you move with confidence as well as speed.
Get Pre-Approved for a Loan.Most sellers won’t even negotiate until you have a pre-approval letter in hand. In a quick market, you need to be prepared to make an offer as soon as you see a condo you want, making pre-approval a necessity.
Your pre-approval letter will go even further if it’s from a well-known local lender. While bigger banks offer a lot of financial services, they often lack a personal touch in their home loans department. If a listing agent sees that you’re using a local lender who knows local real estate laws, who communicates quickly and who is proven to get clients to the closing table without issue, you’ll likely have an advantage in a multiple-offer situation.
Know Your Finances. You shouldn’t make the decision of how much you can afford on the fly. A pre-approval letter will tell you the upper limit of how much a lender will extend to you given your income, assets and credit. However, this amount can be more than you are personally comfortable spending. Before you start condo shopping, sit down and determine how much your budget allows you to spend. You’ll still be able to raise your offer in a bidding war, but only within the parameters of what you can afford. This way, you’ll always be confident in your offers – and, if you lose out on a home, you’ll know you offered your best without overspending.
Know the Market. Becoming an expert in the market will give you a clear competitive advantage against other buyers. Do your homework and gain as much knowledge as possible. Find answers to questions such as: Is it realistic for you to afford a condo of the size you want in your top-choice neighborhood? How quickly are condos selling? What’s a fair price for a condo of the size you want where you’re looking? What is the sale-to-list ratio in the markets you’re targeting? Knowing the answers to questions like these will help you search in neighborhoods where you’re likely to succeed, as well as to quickly assess whether a unit is fairly priced – and whether you want to make an offer on it.
Jump on Listings Quickly. Speed is critical when homes move fast. Make it a priority to visit properties the first day they hit the market. If you are the first person to place an offer, you will have a much higher chance of success than the buyer who waits for the weekend. I can’t tell you how many times I’ve seen a seller accept a solid offer, only to have several additional offers come in the next day. Most of the time, the seller will stick with the initial offer they accepted – and that first buyer avoids having to compete with other offers.
This is why it’s important that your real estate agent can get you into a home as soon as possible. You’ll need to make a lot of effort as well: During your condo search, you’ll need to prioritize seeing hot listings over your social life. It’s the only way to compete in a competitive market.
Choose Your Agent Wisely. While you may just be starting to learn the market, or may be unsure about how much condo you can afford, your agent should have the experience and knowledge to guide you – as well as to alert you when you need to move quickly on a home. Your agent should be a resource and advocate every step of the way, and should know the local market intimately.
Also, if your agent is well-regarded throughout the local real estate industry, his or her reputation can help you in a multiple-offer situation. Like anyone, agents like to do business with people who are ethical, skilled and easy to work with. If your agent is known for these attributes, the seller’s agent will be more likely to guide their client to choose you, provided all other things are equal.
Make Serious Offers. Lowball offers rarely work, even in slack markets. But in a tight market, coming in with a fair and well-researched initial offer is incredibly important. This is where all your research and efforts come together.
If you’ve chosen an agent who can get you into a condo quickly and can help advise you on the market, you’ll be able to make an offer swiftly, at a fair price based on knowledge of the market. And the seller will see that you have a great team lined up: You have a pre-approval letter from a local lender and your agent has a reputation for success.
In a competitive housing market, you want to demonstrate not just that you have the money to buy a condo, but also that you have the ability to close quickly, fairly and efficiently. If you know the market, view listings as quickly as possible and make serious, well-researched offers you can actually afford, your chances of success are high.
Dan Bergman is a real estate agent with Redfin, a national real estate brokerage. He serves the northwest suburbs of Chicago, where he works to find homes that meet his clients’ needs and goals at a fair price. A lifelong Chicagoland native, Bergman enjoys mountain biking, hiking and good coffee. And, of course, he’s a Bears fan!