4 Ways to Win in a Seller's Market

Buying a home in a seller’s market can be difficult, but it doesn’t have to be impossible.

A seller’s market occurs when there is a low inventory of homes for sale and a large number of buyers creating high demand. It can lead to competitive bidding and high prices.

A real estate agent can help you determine if you’re in a seller’s market so you can adapt your home-buying strategy. A market absorption rate calculator can help by calculating how many months it would take to sell all the remaining homes, or inventory, for sale in a given area. A low number means you’re in a seller’s market.

Here are four ways to be a successful buyer in a seller’s market:

Be Ready to Bid High
Whatever your budget is, be prepared to go in with an offer for the listing price. It can prevent other bidders from coming in and can help you avoid competing with multiple buyers.

If that tactic doesn’t work, be prepared to increase your offer to your best offer, but not your final offer. Add an escalation clause of 2-3 percent more than the highest bid, but only if you’re able to pay the most for the property.

Another tactic is to work a bidding war into your budget by only looking at houses listed for up to 90 percent of your maximum budget. This will give you extra money if a bidding war starts.

Don’t Counter
There are no counter offers in a seller’s market.

Put your best offer on the table early. Sellers could see a dozen offers at once, and they’re unlikely to counter with buyers if they have a lot of high offers to choose from.

Show Them the Money
Show a seller how serious you are by offering more cash than normal in earnest money — a deposit made to the seller to show a buyer’s good faith in a transaction. If a high earnest money deposit in your area is $20,000, then increase it by $10,000.

Offer Non-Price Factors
Some sellers will accept your price if you provide some non-price considerations that can speed up the transaction, also called contingencies.

These include waiving the financing contingency, limiting the home inspection to three to five days or eliminating the home inspection completely, giving sellers extra time to move out.