The real estate market has seen some wild swings over the past few years. After the 2008 housing crisis led to a buyer’s market for nearly a decade, the inventory shortage of the 2020s has decidedly shifted the advantage back to sellers in most areas. Home prices are reaching new highs, bidding wars are common, and homes are selling faster than ever before.

For buyers, this creates a frustrating and challenging situation. You have to act quickly, bid high, waive contingencies, and compete with all-cash offers just to have a chance at landing your dream home. It can feel like an impossible task.

 How to Navigate a Seller’s Market in Real Estate?

However, all hope is not lost. With the right strategy and a lot of perseverance, you can still find success as a buyer in a seller’s market. Here are some tips for navigating today’s ultra-competitive real estate landscape:

Get Pre-Approved for a Mortgage

In a fast-moving seller’s market, buyers need to be ready to act quickly. Having a pre-approval letter from a lender demonstrates to sellers that you are a serious buyer who has their financing in order. While it doesn’t guarantee that the seller will accept your offer, it gives you a major leg up on buyers who haven’t taken this step yet.

The pre-approval process involves applying for a mortgage, submitting financial documentation, and undergoing credit checks and employment verification. This allows the lender to determine the maximum amount they can loan to you.

Aim to get pre-approved for an amount higher than you think you’ll need. This gives you the flexibility to bid over asking prices and show sellers you can afford homes at the higher end of your price range.

Be Ready to Act Fast

In a competitive market, homes are spending less and less time on the market before going under contract. You need to be prepared to see a home and make an offer on it all within the same day. If you hesitate for even 24 hours, the home could be gone.

This means as soon as you see a home hit the market that fits your criteria, move fast:

• Schedule a showing as soon as possible
• Thoroughly review listing photos and details ahead of time
• Make sure your agent and lender are readily available
• Know your budget, must-haves, and negotiating limits
• Be ready to submit an offer within hours of seeing the home

The days of taking your time and contemplating an offer for weeks are long gone in a seller’s market. Hesitate and you’ll likely lose out.

Remove Contingencies

One of the key strategies for making your offer more appealing to sellers is reducing contingencies. For example, waiving the financing contingency removes the clause that your purchase hinges on getting a mortgage loan approved. This makes your offer more attractive, as the seller doesn’t have to worry about you failing to secure a loan.

Inspections can also be done before making an offer, rather than making the purchase contingent on inspection results. While this adds some upfront costs if you don’t end up getting the home, it shows you are serious and reduces conditions for the seller.

If you do keep contingencies, be prepared for sellers to still favor offers without them. Removing them shows you are confident in your financing, comfortable with the condition of the home, and less likely to ask for repairs or price reductions.

Increase Your Earnest Money Deposit

A higher earnest money deposit also communicates to sellers that you are serious about purchasing the home. This non-refundable deposit is a portion of the home’s purchase price you pay upfront to show good faith. It gives sellers confidence you won’t walk away easily from a deal.

In a typical market, earnest money might be 1-2% of the total sales price. But in today’s conditions, coming in at 3-5% or higher can give your offer an edge. Just keep in mind that you forfeit this money if you back out of the deal for any reason.

Bid Over Asking Price

Gone are the days of finding hidden gem homes priced way below market value. In a seller’s market, you’ll likely have to bid well above the asking price to have a shot at landing your dream home.

Do your market research to understand what homes are selling for in the neighborhood and the price range you are looking in. If comparable homes are going for $20,000 above asking, you’ll want to come in competitively above the list price as well.

Also, find out as much as you can about other offers. Are there multiple bidders? Has the seller already received over-ask offers? The more intelligence you have about the current market demand for that particular home, the better you can position your offer price.

Bid with a Round Number

While small details likely won’t make or break your overall offer, bid with a round number like $425,000 instead of $423,897. It makes your offer look cleaner and more decisive to sellers. Odd amounts also signal you may be stretching beyond your ideal budget or don’t have as firm of an understanding of market prices.

Lean on a Great Agent

In today’s complex real estate landscape having an experienced, tenacious agent on your side could be the difference between landing your dream home or missing out. Lean on their expertise in setting competitive offer prices, writing compelling offer letters, and negotiating effectively with sellers.

Top agents also have connections and insider intel that gives them an edge. They may catch wind of homes coming on the market before they are officially listed, giving you a jump start on preparing an offer. Explore reviews and repeat business to find an agent with a proven record in competitive markets.

Act Quickly, But Avoid Impulse Buying

While it’s important to move quickly, resist the urge to impulse buy and stretch beyond your budget just because you feel desperate to win a bid. Even in a seller’s market, there will be other homes coming on the market that could be a better fit or more attractively priced.

Give yourself enough time to still do inspections and appraisals to ensure you understand the condition of the home you are bidding on and feel confident it’s worth the offer price. Don’t let the competition push you into overpaying for a home that doesn’t align with your needs just because you fear you won’t find another option.

Be Persistent and Patient

Navigating today’s real estate market will certainly test your patience. You’ll likely have to look at a high volume of homes and make numerous unsuccessful offers before finally landing the property you want. Don’t get discouraged as you experience bidding wars and rejection letters. Stay focused on your end goal and be persistent in your search.

Set up automatic email alerts to receive instant notifications whenever a new home hits the market. Check listings frequently and schedule showings as soon as possible before the masses catch on. Follow up quickly and aggressively on every potential lead. You may have to look at 50 homes to make 10 offers to finally get one acceptance, but it will be worthwhile once you land your dream home.

Consider Expanding Your Search Area

Frustration with constantly losing out on homes may be a sign to expand your geographic search. Even if you can’t find something in your ideal location, look at adjacent neighborhoods or surrounding suburbs that offer better affordability or less competition.

Proximity to major highways or public transportation can keep your commute manageable even if the home is further out from the city than you hoped. You may have to compromise on location, but can likely get more homes for your budget. Just run the numbers to ensure the savings outweigh the added commute time and costs.

Adjust Your Expectations

Anyone house hunting today has to realize sellers have a clear advantage. With limited inventory, you’ll likely have to make some compromises to find a home in your budget. You may not end up with your perfect home in the perfect location – and that’s okay. Focus on your must-haves like size, number of bedrooms, school district, etc. Try to stay open on your nice-to-have features like updated finishes, proximity to amenities, or luxury upgrades.

With a realistic outlook on today’s hypercompetitive landscape, you can avoid disappointment when you inevitably have to make some concessions during your home search. Stay open-minded about location, condition, and layout. Narrow your focus too much on a perfect home and you may miss out on other great options available.

Increase Your Budget

If at all possible, try to increase your purchasing power in this market by boosting your budget. Even an extra $20,000 can make a difference in how much competition you face for homes.

Consider borrowing from 401ks or family to increase your down payment, running the numbers to ensure it makes sense with mortgage rates and fees. Boosting your credit score to qualify for better financing can also help you afford higher-priced properties.

Saving a bit longer before purchasing to build up a larger down payment is another option. While prices are rising now, they will level off eventually, so delaying a few months to improve your financial position can give you a better chance at affording your dream home.

Stay on Top of Your Mortgage Rate

Mortgage rates fluctuate frequently, which can impact your purchasing power. Stay on top of rate changes and lock in the lowest rate possible when you find the right home to purchase. Just a quarter of a percent difference in your interest rate can equate to thousands of dollars over the lifetime of your loan.

Shop around with multiple lenders and compare both rates and fees. Look beyond just the headline rate to understand the true costs of various loan options. Having a great rate won’t help much if excessive loan origination, underwriting, or processing fees bring up the overall costs significantly.

Consider Alternatives to Traditional Loans

Beyond standard 30-year fixed-rate mortgages, explore alternative financing options that can improve your affordability. Adjustable-rate mortgages start with very low introductory rates, helping you qualify for higher loan amounts initially. However, your monthly costs will rise over time as the rates adjust upwards.

Targeted assistance programs for first-time homebuyers offer below-market rate mortgages, though inventory and eligibility are limited. VA and FHA loans allow lower down payments and looser credit standards for those who qualify. Just ensure you fully understand the costs and risks of any financing program before committing.

Navigating today’s real estate market will certainly test your patience and flexibility as a buyer. But with persistence, preparation, and the right approach, you can still achieve your homeownership dreams even when the odds are stacked against you. Stay nimble and proactive in your search, get fully ready to make competitive offers quickly, and partner with experienced professionals. With the right strategy, you can find success as a buyer even in the most intense seller’s markets. Just stay focused on your homeownership goals and be willing to make some compromises along the way.