Combat: Buying in a Seller’s Market

Yes, it’s a hot market.

If you’re a seller, it couldn’t be better than this. People are fighting over your house – the one with the too-small kitchen and the stuffy upstairs!

If you’re a buyer, well, prepping to purchase is like training for full armor combat.

In times like these, where nearly every house, even the uninspiring, are getting multiple offers, how does a buyer compete without pledging major organs?

It may seem difficult, maybe impossible. But just like in any other military campaign, you move forward based on strategy. And no, that’s not code for Write-An-Offer-For-Every-Dime-You-Have.

Start by doing your homework


First class is geography. Pop quiz: Where do you wanna live? Seems like an easy question, but some of it is going to be dictated by housing prices in the areas you prefer. If they are too high for your current budget, do some initial reconnaissance on other potential areas before you start house-hunting. Check out the commute (easy question for SIRI or Google before you even leave home). Cruise the downtown, the areas you might shop in, gyms you might work out in, restaurants you might eat in. Wander the neighborhoods. Please Note: Your Realtor is not a tour guide and no, you should not multitask a house search with initial reconnaissance! You should never find yourself saying upon leaving a showing, “I LOVE this house! I definitely want to offer on it. Wait, where exactly am I?”

Reading glasses resting on a contract

Next is math – Find out the general list price range in the area you like and how it looks on your budget. What programs exist to help you with a down payment or even eliminate it? Chances are, you will need the help of a mortgage broker to help you determine those things. Next up: What’s the average ratio between list price and sold price? Consider it the multiple offer formula. This is where your Realtor comes in (that would be me????). You need to know what you’re walking into on a negotiation, and having internet stats from weeks ago is likely going to be old news. Consider it a situation report on action on the frontlines.

If you know that houses in your chosen area are closing at an average of 10 percent more than list price, figure it into your potential budget and begin shopping at least 10 percent below your max price. Avoid even looking at houses priced at the top of your pre-approval unless your trunk is full of cash. Some battles just can’t be won. Recognize when an area or a particular house could be your budget’s Waterloo!

Personal Motivation / Risk Tolerance

Okay, almost ready to shop. One last point of preparation – looking ahead to Being the winning offer. Yessss! Hold up: It is very possible that the price you are willing to pay will not be blessed by your lender if the eventual appraiser does not value the house high enough to meet the agreed-upon sales price. Appraisals are well behind the fast-moving market, reflecting deals made between one month and an entire year ago. If your lender won’t lend you enough money to cover the sales price you promised, you’re faced with letting the seller know that your deal – as written – will not be coming true. A well-represented seller may not even seriously consider your very high offer if it is not accompanied by some sort of contingency plan for a low appraisal. Before you shop, think about how you might cover the gap between the price promised and where the house might appraise. Again, you may need to shop below your means to ensure that you can offer some coverage for that gap. For those buyers who have large down payments, an appraisal waiver may be possible.

You should also ask your Realtor (yes, that’s me!) to come up with an automatic escalation clause that could potentially prevent you from spending every last dime you have while at the same time potentially winning at a bidding war.


Don’t want to be in a bidding war? Fantastic! Offer on something no one else wants (you may not want it either) or wait until the seller’s market becomes a buyer’s market. There is a significant downside to postponement I’ll address in just a bit, but it is always an option.

Do not shop unless you’re ready to pull the trigger. Houses you saw on Friday will be gone by Monday, so unless you’ve come prepared with spear, or a pre-approval from your mortgage broker and the will to use it, stay home. Yes, I shifted my metaphors there, just wanted to be sure you were paying attention ????

Help yourself (help the seller)

Finally: Understand that buying a house in a seller’s market is not just about price, it’s also about making life easy for the seller. When you’ve come to the end of what you can offer in price, offer courtesy: Does the seller need time to move out after closing? Can you provide that, rent-free? Can you agree at the outset to waive a certain amount in repairs that come up in an inspection report? What about the sellers’ costs – can you pay for a moving van? Help pay off a solar panel loan? The potential for creativity is endless – ask your Realtor (again, me) for ideas!

Compromise: The art of the possible

A note on compromise – don’t shoot yourself in the foot. If the market is unfriendly toward your dream house vision, consider a two-step vision. Purchase an in-between property, something that isn’t the dream house but is something suitable that allows you to, literally, get your foot in the door. Once you are an owner, your property is increasing in value as long as the economy is healthy. Its increased value will form the foundation for the dream property in a few years, maybe as few as two years. The alternative – staying out of the market while you save $10,000 – may simply result in your arrival coinciding with prices having risen $10,000 during the time you sat out. Illustrative point: Portland’s median home price jumped $8,900 in a single month in March.

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