5 Secrets to Getting Your Dream Home in a Red-Hot Seller's Market

The Boston real estate market goes through cycles – sometimes it’s a buyer’s market, and sometimes it’s a seller’s market. In a seller’s market, it can be tough to find your dream home; that’s because you’re competing against many other buyers for the same pool of homes. But don’t stress too much over it: This guide gives you five secrets that you can use to find your dream home, even when the market is tilted in sellers’ favor.

5 Secrets to Getting Your Dream Home in a Red-Hot Seller’s Market

Check out the five secrets to scoring your dream home in a seller’s market:

Get mortgage preapproval and a mortgage commitment letter before you start looking
Think about putting an escalation clause in your offer
Talk to your agent about not asking for concessions and minimizing contingencies
Offer a little more than asking price, if you can
Let the seller know you’re flexible on closing dates or that they may rent back the property for a month or so

Scroll down for a closer look at each.

Secret #1 to Buying in a Seller’s Market: Get Preapproval and a Mortgage Commitment Letter Before You Start Looking

If you’re serious about buying a home in a seller’s market, the first step is to get preapproved for a mortgage. A preapproval puts you in a much stronger position than someone who doesn’t have one, because it shows sellers that you’re truly a qualified buyer; it means that a lender has already said you can get financing to buy the home.

A mortgage commitment letter takes things one step farther. A commitment letter is issued by a lender after you’ve applied for a mortgage and the lender has approved your loan. It’s basically a written guarantee that you’ll get financing to buy the home, provided that the property meets certain criteria (such as being appraised at or above the purchase price). In a seller’s market, having a mortgage preapproval and commitment letter can make a big difference.

Secret #2 for Buying in a Seller’s Market: Consider Putting an Escalation Clause in Your Offer

An escalation clause protects you if another buyer comes in with a higher offer; it essentially says that you’re willing to match any other offers up to a certain price.

Here’s how it works: Let’s say you find a home that you really love, and you want to put in an offer of $500,000. But you’re worried that another buyer might swoop in with a higher offer. In this case, you can include an escalation clause in your offer that says you’re willing to match or exceed any other offers up to $520,000.

If another buyer comes in with a higher offer (over your cap), the seller’s agent let you know so you can decide whether to match it. Escalation clauses can be helpful in a seller’s market because they help you stay competitive against other buyers.

Secret #3 for Buying in a Seller’s Market: Talk to Your Agent About Minimizing Contingencies and Asking for Concessions

In a seller’s market, some of the usual rules about buying a home might not apply. For example, it’s often not realistic to ask the seller to make repairs before closing or to include a home warranty in the sale. It’s also not realistic to ask for too many contingencies – the conditions that must be met for the transaction to go through. Though it’s usually not a good idea to waive all contingencies (such as home inspection or financing), it may be smart to say that you’ll pay up to a certain amount over the home’s appraised value or that you’re willing to be flexible on something else. You should talk to your real estate agent about which contingencies to keep and which you can skip.

You may also want to avoid asking for too many concessions. In a seller’s market, sellers are less likely to give buyers concessions (such as help with closing costs). If you and someone else have otherwise identical offers, the seller may pick the one that asks less from them.

Secret #4 for Buying in a Seller’s Market: Offer More Than Asking Price, If You Can

In a seller’s market, it’s not uncommon for buyers to offer more than a home’s asking price. In fact, in some cases, you may need to offer significantly more than a home’s listing price just to stay competitive against other buyers.

If you’re wondering how much more you should offer, talk to your real estate agent. They’ll give you a good idea of what other buyers are offering, and how much more you may need to bid to win the home.

Keep in mind that there’s no guarantee that your offer will be accepted just because you’ve offered more than the asking price. But if you really want a certain home, offering more may be your best bet.

Secret #5 for Buying in a Seller’s Market: Let the Seller Know You’re Flexible on Closing Dates or That They May Rent Back the Property for a Month or So

Offering to stay flexible on closing dates or telling the seller they can rent back the home from you for a short term can be tremendously helpful if the seller needs more time to move out of their home. This can be a deal-maker if the seller is still looking for a new place or has to rearrange their plans – and even better, the seller pays you rent for the term that they remain in the home.

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