Buying a Home in 2021 - It's a Seller's Market

The homebuying experience has changed drastically in the last year in big part due to the COVID-19 pandemic. Many Americans decided to take advantage of the record low interest rates and buy houses in 2020. Demand also went up because people were in quarantine and spent all their time at home, which led many to many reevaluating their housing needs and opt for homes outside of major cities, with space for home offices, as well as extra room for family members.

All of this led to us being in a seller’s market in 2021. A seller’s market is when the supply for homes is low while demand is high. Prospective homebuyers will need to change their outlook and approach to homebuying if they want to successfully navigate this new market and purchase a home. If you are planning to buy a home this year, here are a few ways in which you can prepare. 

Get Pre-Approved

No matter what kind of market you’re in, it is always best to get pre-approved before going to shop for houses. The last thing you want is to go look at homes, find the one you love, then have to wait on an approval and lose the dream home to another buyer.

This matters even more when you are in a seller’s market. A seller won’t want to wait on a prospective buyer to secure financing and miss out on an offer from someone who is ready to buy, ASAP! Getting pre-approved shows sellers that you are serious about purchasing a home, and helps avoid uncertainty in the process from the very beginning. 

Have Your Finances in Order

It is imperative that you have set your budget beforehand, especially if you are buying a home with a co-borrower. Not only does this help avoid any arguments, but it also saves you time by narrowing down the houses you go look at.

Additionally, you should decide how much money you can afford to put down on a home, and organize the funds so that they are all in the same bank account, since your lender will need the account information when you move forward with the mortgage process. If you plan to borrow money for the down payment from relatives, it is important that you disclose this to your lender in case they have restrictions on gift funds. 

Be Ready to Pull the Trigger

In 2021, houses are on the market for an average of just 28 days (compared to 44 days in 2019), so now isn’t the time for window shopping. Many people enjoy visiting open houses for homes that cost double their budget. This is fine if you are not actively looking to buy a home, but if you are serious about purchasing, you need to be decisive.

It is best to have a list of things that you absolutely need in your home before you start shopping, and if the house checks off all your boxes, you can feel confident about putting in an offer right away. You can also save yourself a trip by researching the house listings and pictures online before visiting. 

Shop Below Your Budget

In a seller’s market, it is common to get into a bidding war. Because houses are in short supply, you may be up against more buyers who have also put in an offer on the home you love, which pushes up the price. If you really love the property, you may have to offer more than the asking price. Looking at homes that are slightly under your budget will give you the wiggle room to up your offer in these cases.

To make a bold statement to your seller, you can also write a letter with your offer explaining why you fell in love with the home. Having lived in it themselves, many sellers have emotional attachments to the house they’re selling. Knowing that you would appreciate it just as much goes a long way.

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