Navigating a Competitive Real Estate Market For Buyers and Sellers

A lack of housing inventory and an ever-growing pool of potential buyers has created an incredibly competitive real estate market across the U.S., particularly in Steamboat Springs and other resort towns. New listings often get a surge of showings within days of listing, frequently followed by multiple offers. As a result, there are bidding wars like never before. So, how do buyers and sellers navigate such tricky waters?

TIPS FOR SELLERS

• Consider vacating your property the first few days of listing to accommodate numerous showings.
• Decide what factors are most important to you, whether it is price or terms.
• If you invite buyers to make their best and final offer, it can go two ways: You may discourage a buyer who felt they were already making their strongest offer or you may get more than the current offers on the table.
• Be fair and honest with buyers. If there is a sense that you are playing one off against the other, you run the risk of losing out.
• Verify the financing of your ‘best’ offer. Your listing agent will be able to tell you whether a buyer is pre-approved with a lender, if it is not a cash offer.

TIPS FOR BUYERS

• Obtain pre-approval from your lender before you make an offer. It is much stronger than a pre-qualification letter, which serves as a first step to establishing what you can afford to borrow.
• Make a strong initial offer and avoid going too far below the listing price in the hopes of negotiating. Unfortunately, for many buyers it takes losing out on a few properties to understand that the market advantage is currently with sellers.
• Some contingencies such as selling another property first to close the deal could put you at a strong disadvantage. You could consider a bridge loan, or if you’re able to make an all-cash offer, it may be more competitive.
• In a competitive market, you may feel pressure to forgo a home inspection to win a bidding war. Forgoing a home inspection can be precarious and there are other ways to strengthen an offer, such as increasing a down payment, or offering the seller additional days to move out before taking possession, for no fee.
• Consider including an escalation clause with a maximum price into your offer, suggesting you’ll increase your purchase price by a set amount above the next highest offer. Be sure to discuss the potential pitfalls of this strategy with your agent.
• Make a confidential offer or establish a confidentiality agreement with the seller, to avoid the listing agent from sharing details of your offer with other buyers.
• If you are unsuccessful in your bid, ask if the seller will consider a back up offer, should the sale fall through.