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7 Things You Need to Know About a Seller's Market in Montana

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The housing market, just like any other, operates according to the rules of supply and demand. In the real estate world, the market is either a buyer's or a seller's market. A seller's market occurs when the demand for homes exceeds the number of homes on the market.  

In such markets, the sellers have the advantages. Housing prices are higher and, in some instances, bidding wars may actual occur. When looking for a home in a seller's market, follow these guidelines:

1. A Mortgage Pre-approval is Essential

In a seller's market decisions are made quickly. So, to be sure you can beat the competition, you will want not only to have a pre-approved but also a secured mortgage waiting for you to find the house you want. Being approved makes you more enticing to a seller because they know you have the funding to back up your bid.

2. A Real Estate Agent May be Necessary

Again, being first is crucial in a seller's market. Real estate agents have access, knowledge, and connections you do not. They are the first to know when a new house goes on the market, and they have the information you need for each property.

3. Offering More Cash Up Front May Help You Seal the Deal

Perception goes a long way when you are buying a home.  Offering more earnest money up front or discussing a larger down payment will not only make you appear  more eager and more likely to go through with the purchase but will also make you appear more confident that your financing will go through.  Furthermore, a larger down payment qualifies you for many more loan options.  Therefore, the seller may be more confident that you will be approved and the sale will be completed.

4. Do Your Research Up Front

You have a short window of opportunity to make an offer in a seller's market. When the home market is hot, houses go quickly--especially during open house promotions. Not only will you want to get there first on open house days, but you will also want to have all your background research done beforehand. This way, if you like the house, you can bid on it quickly with confidence. It is not uncommon for homes to get bids before the end of the open house in a seller's market.

5. Do Not Be Afraid to Start Low

Even in a seller's market, homeowners have to consider first offers, so open conservatively. Once you set a bid, the negotiation will continue between you and the homeowner until you both agree or you walk away. The owner needs to accept or counter your offer, so there is room to adjust your bid. Therefore, it is okay to begin low. However, take care not to make it insulting, or the homeowner may dismiss any later bids as well.  A reasonable lower bid provides a good opening point for negotiations.

6. Being Flexible on a Closing Date May Help You Get the House

There are many reasons homeowners may ask to extend the closing date or have a longer escrow period. Some may take longer to pack their homes. Others may be waiting for their new home to become available or ready for them to move in. Still others may be leaving the area and not yet have arranged accommodations. No matter the case, being flexible on the closing date may give you an edge in sealing the deal. The homeowner's real estate agent will often explain such a situation with you when you make your bid. Under some circumstances, the bid may be rejected if you cannot adjust your closing date.

7. Knowing Your Budget Limits Will Prevent Future Problems

Finally, while you can expect to pay a little more for a home in a seller's market, you still need to make sure to stay within your budget.  It is too easy to get too excited about a home that you want and continue to negotiate a price that may be outside of your estimated monthly payment or down payment budgets. You need to know your limits and keep to your budget to avoid payment or cash flow problems in the future.

Knowing these seven tips will help you not only be more confident in a seller's market but will also make you more likely to seal the deal on the home of your dreams that fits your budget now and in the future.

If you are planning on buying a home or are looking to get pre-approved for a mortgage, contact the experienced professionals at Rocky Mountain Credit Union today to get started.

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