Looking to buy a home in South Carolina? Unfortunately, you’re dealing with a seller’s market.
Low interest rates, a slowdown in new construction and buyers eager to move after a year in quarantine have all led to “a huge amount of demand and not a lot of available houses,” said Morris Lyles, president of South Carolina Realtors.
A March report from his organization found that the number of houses for sale was down 53.8% statewide compared to the same time last year. Meanwhile, median sale prices went up 13.2%.
“In this climate, you might see five offers come in one day and they’re all above asking price,” said Lyles.
Sellers may have more bargaining power at the moment, but that doesn’t mean buyers should give up. Here are some ways to give yourself an advantage in a competitive market.
Figure out your financing
Knowing how you’re going to pay for a house is always important, but particularly when you’re up against several other buyers. No seller wants to waste time on an offer if there’s a chance the financing may fall through
If you can pay in cash, by all means do. But most likely you’ll need to take out a mortgage loan. Make sure you get approved for one ahead of time.
“Getting pre-qualified for a loan shows that you’ve done your due diligence and that you have a responsible financial strategy,” said Clint Hammond, branch manager at Mortgage Network Inc. in Columbia.
Not all loans are created equal. A letter of pre-approval from a local lender who specializes in mortgages tends to look better than one from a large national bank.
“Those places don’t know the local market, they don’t know the local agents, and they won’t be able to give the same kind of advice,” said Hammond.
Do your homework
Under normal circumstances, buyers will typically find a house they like online and then take a few days to drive past it, research the neighborhood and fantasize about living there.
Under the current conditions, though, “by the time you do all that, the house is long gone,” said Mary Lane Sloan, an agent with The ART of Real Estate in Columbia.
Save yourself the trouble by figuring out exactly what you want in a home before you start browsing.
“You want to familiarize yourself with different neighborhoods and even different streets that you like so by the time something pops up there, you’re already prepared,” said Sloan.
Find a well-connected agent
With websites like Zillow, Realtor.com and the local Multiple Listing Service making it easy to search through thousands of homes in a matter of seconds, you may be tempted to cut out the middleman and find a place without the help of a buyer’s agent.
But real estate agents, particularly those with strong local connections, can help alert you to houses before they get listed, Lyles said. Agents can even contact homeowners in their network to see if they’re interested in selling.
“I might see on Facebook that a family I sold to a few years ago is having their second kid and their house is getting tight for them,” said Sloan. “Now I can reach out and see if they’ve thought about moving because their home would be a really good fit for this buyer over here.”
In some cases, having the right real estate agent could be the deciding factor in getting your offer accepted because listing agents prefer to work with buyer’s agents who they know and trust.
Once you find a home you love, do not hesitate to make an offer or someone else will beat you to it.
Even if you’re the first to throw your hat in the ring, you probably won’t be the only one to make an offer. So make sure your first offer is your best. If you’re expecting to do some negotiating and walk away with a bargain, you’re going to be disappointed.
“In today’s setting you have to come in with at least what they’re asking, but realistically higher than that,” Lyles said.
Get creative with your offer
Just because you can’t afford to come in significantly above asking price doesn’t mean you can’t make a compelling offer.
“It’s not always about money,” said Lyles.
Some common compromises buyers can make to sweeten their offer include:
Shortening the due diligence period in your contract. This clause gives the buyer a set amount of time to walk away from a contract risk free.
Waiving the appraisal contingency in your contract. This clause allows a buyer to rescind their offer if the home is appraised at a lower value than the sale price.
Waiving the home sale contingency in the contract. This clause is designed to give buyers time to sell their old home before purchasing a new one.
Remaining flexible on the closing date to accommodate the seller’s schedule.
As of late, Lyles said buyers are coming up with more unusual perks such as allowing sellers to take appliances like washers and dryers with them.
“Your agent needs to be investigating everything they can to figure out how to best craft the offer,” he said.
It can be easy to get caught up in the excitement of a fast-moving market. But before you do anything rash, take a moment to slow down and ask yourself, “is this really what I want?”
“You’re not buying pants, you’re not buying a sweater,” said Sloan. “You can’t return the house if you don’t like it.
If you’re not seeing anything you like go up for sale, there’s no shame in playing the waiting game. Ultimately, it’s better to move into your dream home a few months later rather than settle for a house that’s available right now.
What not to do
Though there are always exceptions, Lyles and Sloan said they tend to advise buyers against:
Purchasing a home sight unseen
Waiving your right to an inspection
Waiving your title contingency, which protects a buyer from having to go through with the sale if the seller is unable to transfer the title to them free and clear.