5 Tips to Buy a Home When Inventory is Low

Since real estate, like all other industries, relies so heavily on the laws of supply and demand, with low inventory it may seem like sellers are in the power position while buyers and investors are forced to overpay for properties. Fortunately, there are some ways that you can find a great deal on a home, even with the housing inventory at or near a record low.

Get Financing in Place Early

In an environment where inflation can make it feel like a trip to the grocery store is going to break the bank, it’s safe to say that most people need to get a mortgage when they are looking to purchase a home. The best first stop on your journey to buying a home is get financing early, this means finding a loan officer to work with and starting your application. 

The process of obtaining a mortgage can take some time, and in a housing market with low inventory, you don’t want to be waiting for financing while someone who already has a pre-approval swoops in and purchases the home of your dreams. Another thing to consider in a low inventory market is that there may be a number of people looking at the same property so having your pre-approval done before going to the home allows you to be more prepared to make a quick decision on your offer, if needed. 

Search For Old Listings

When houses have been on the market for an extended period of time, there’s a reason. In some cases, it’s because the sellers have overvalued the home and set the price point too high. In other situations, houses sit on the market for a long time because the property is outdated or in a state of disrepair. 

When homes sit on the market, the sellers often become more motivated to finally sell them, meaning they may be willing to take less than their asking price for the property. Additionally, if you are willing to consider a renovation loan then you may be able to walk into a property and see it’s potential vs. the current state it’s in. 

Don’t Get Desperate

As a home buyer, vacation home shopper or investor, it’s easy to become so frustrated by the lack of available inventory that you allow desperation to creep in. All of a sudden, a home that you know is worth $200,000 under normal market conditions can be a tempting buy even though it’s listed at $250,000. 

While you need to jump at a good deal in a limited market, it’s crucial that you don’t become so focused on being proactive that you make a bad deal in the name of desperation. Remember that if you are using a mortgage they will only finance based on the lower of the sales price and the appraised value; if a home is on the market for $250,000 but only appraises at $200,000 your lender will not cover the difference through financing. 

Be Clear on Your Non-Negotiables

Finally, in order to make a deal happen in a limited housing market, you may not be able to get everything you dreamed of at the price you hoped. It’s ok to concede on some items, you may have to give in on a few items in order to win the deal. If you are clear on what are your “needs” vs. “wants” it will make it easier to determine what you are ok going without while reminding you of the things that are just non-negotiable. 

Non-negotiables are typically the things that you would be willing to walk away from a house for if they didn’t have them. For example, someone who has a dog might need to have a yard so they can determine that a condo or something with little to no yard isn’t an option for them and they would happily walk away from it even if everything else about the house was perfect in their eyes.

Having these non-negotiables spelled out before starting your home search will serve as a great guide for you and your real estate agent to keep you from looking at homes that don’t meet your needs and allows you to make a quick assessment and decision when you are in a multiple offer situation.

There is no question that the current real estate market favors sellers. That doesn’t mean that buyers and investors have to sit on the sidelines and wait for the market to shift. Instead, you should work with a company that can help you achieve your purchasing goals. 

Summit Mortgage offers a technology-based approach to mortgages, designed to help expedite the process and put you in more control of your purchasing goals. Our process ensures that you aren’t sitting around waiting for a pre-approval as a limited inventory of available houses flies off the market. Get started by filling out our Quick Start Form and we’ll connect you with a loan officer that matches your specific needs. They’ll provide a free consultation and guide you through every step of the loan application process.