The Albuquerque real estate market is hot! If you’re in the market for a new place, no doubt you’ve found a house or two only to find out that the property you want already has multiple offers on it or even worse, it may have already sold! This can be very frustrating, but don’t give up! I’m going to give the 7 steps to buying a home in a seller’s market.
What is a Seller’s Market?
When Realtors says it’s a seller’s market, what they mean is that the balance between buyers and sellers in the marketplace is weighted in favor of sellers. In plain English; right now, more people are looking to buy homes right now than sell them.
This balance between buyers and sellers in the marketplace can be understood by looking at the absorption rate of the market. If you want to understand more you can read more about Absorption Rate here.
When this condition exists, sellers are in the driver’s seat during negotiations. They know that homes are in demand, and as a result they price them higher and they negotiate harder. It’s not that they are taking advantage of home buyers, it’s just a result of the law of supply and demand. Homes are in great demand because the absorption rate of homes is low. Therefore they can sell them faster and for more.
That’s the bad news, but the good news is, if you’re looking to buy an Albuquerque home, there are some things you can do to put yourself in a position to succeed.
A Quick Tale of What Not To Do
The good news is, like all things in life, if you are really well prepared, you should still be able to buy a home with a minimum of hassle and frustration. You just have to understand the rules of the game.
Before I give you the rules or 7 steps to buying a home in a seller’s market, let me tell you a story that illustrates what can go wrong if you’re not prepared.
But first, to help you understand how these rules apply, let me tell you a story of something that occurred last weekend.
I was holding an Open House at a home in NW Albuquerque. The home had been on the market for 9 days, and although it had received a bunch of showings, it hadn’t received any offers. I knew the condition of the property was average at best, but I also knew that I had helped the home owners price it right for the market. It was one of the few homes available for such a low price.
Yet the home hadn’t sold. I was perplexed.
Early in the week I decided to hold an Open House so I could watch buyers react to the home and see what I could learn.
Open House Leads to Buyer Frenzy
The open house started off slowly, as they often do, but about an hour into it I had my first group of buyers show up. They informed me that they had already seen the house with their Realtor, but they were trying to make up their minds between two different homes for a week. By the way, a week is a really long time in a seller’s market like this.
I showed them my listing, told them all about the great neighborhood it was located in, and by the time they left I was pretty darn sure they were going to make an offer. I was excited for my sellers, and a little relieved too because just before the open house I had received a lowball offer on the home. It’s always good to receive an offer, but it’s never fun to present a lowball offer to your clients.
The remainder of the open house went well, and just as I was packing up to leave I got a text that a Realtor was writing up an offer on the home! I thought “wow, that was really fast, they must have called their Realtor as they were getting in their car to leave.”
However, this offer was from someone who had also seen the home a week earlier! They had wanted to make an offer on the spot, but they hadn’t taken time to get pre qualified for a loan. When their Realtor told them my seller wouldn’t consider any offers that weren’t accompanied by lender letters, they called a loan officer and started the process. It took them almost a week to get their documentation together and send it to to their lender.
So now I had two offers on the house. One was clearly superior to the other, and even though it was a little low the sellers were about ready to accept it. As I was driving home however, the Realtor for the really nice couple that I met at the open house called me and told me she was going to be writing an offer. She asked me if I had received any offers on the house and I said, yes, that I had received two. Knowing this, the third buyer wrote a list price offer.
My sellers were super excited as I explained that since we had multiple offers, we ought to notify all three of the buyer’s agents that we were asking for highest and best offers from all parties.
A bidding war ensued, an in the end it was couple number two that got the house.
7 Steps to Buying a Home in a Seller’s Market
Take these 7 steps to prepare and then be decisive! Get yourself ready and then act quickly!
- Call a lender and get pre qualified for a loan. It’s not a lot of fun, but it will make a big difference when it comes to getting the home you love!
- Talk to a Realtor or two on the phone to understand market conditions in your area and your price range.
- Look at plenty of homes online and in person. Gauge the market and learn what your money can buy so that you’ll know a good deal when you see it!
- Ask a Realtor to set you up on the MLS to receive listing alerts so you can see the new listings right away. Sometimes even the difference of a couple of hours will mean that you lose out on a great home. View Just Listed Homes for Sale in Albuquerque.
- Go see the new listings as they come on the market. Go see them that day!
- Be decisive! If you like the home don’t wait to make an offer!
- Understand that most homes sell for about 2% below list price. Making an offer that’s 7 or 8% off list price is not usually going to work. If you don’t like the home enough to bring an offer close to list price, wait until you find a house that you do.
Prices are just starting to go up, take action now or you’ll have to pay even more tomorrow! And remember these 7 steps to buying a home in a seller’s market, if you follow them it will really help!