Leading homebuyers through a competitive, low inventory market can be difficult. Even the most experienced real estate agent can have a hard time helping their clients through a tight housing market. From bidding wars to high bid prices, set expectations of your customers for what to expect in a hot market.
Here are some tips to give your home buyers on what to expect in a hot market.
1. Be transparent about the real estate market
Be open about what homebuyers should expect in a seller’s market. This is doubly true if your customer is a first-time home buyer. Expect to face bidding wars, cash offers, and higher prices.
Gently discuss with your customers what they can expect with what they can afford. Work through your list of needs against what you want. Find out absolute deal breakers and try to stay away from them. You may not find your perfect home, but you can find one that you love.
2. Encourage customers to get verified approval
A Verified Letter of Approval (VAL) from Rocket Mortgage® can help make your client’s offering stand out from the rest. A VAL is not just any prior authorization. It shows the seller that your customer is ready to buy as they are backed by the buying power and expertise of Rocket Mortgage.
With Rocket ProSM Insight, you can always access your customer’s VAL, as well as the information related to their approval.
3. Take escalation clauses into account
To make a more competitive offer, talk to your customer about adding an escalation clause to their offer. If they are outbid, an escalation clause gives an immediate response and determines how much more they are willing to bid over competing offers.
However, one disadvantage of an escalation clause is that a seller can decline the offer knowing that it is not the customer’s best offer.
4. Talk to your customers about additional incentives
In a seller’s market, there are a few ways that buyers can sweeten the deal. Offering a more serious cash or paying a bigger down payment shows the seller that the customer is serious about the purchase and can help make the offer stand out.
You can also talk to your customer about avoiding contingencies, e.g. This can give them an edge over a home they are serious about. However, do tell them how it can backfire. For example, if the house is valued less than the accepted price, they will have to fill the void or lose their serious money if they step back.
5. Understand your customer
Some customers are more conservative with their spending than others. Be honest with your customer about what they can afford, but also know when to take risks. If they are looking to buy on the upper end of their budget and forego contingencies, let them know what it could mean for their finances, but also know that it is their choice.
Finding an apartment is difficult. The most important thing you can do for your client is give them good advice, coach them and connect them to the best house they can get.
Bottom line: focus on the positives
Mapping the waters of a market with limited inventory is difficult for any buyer’s broker. You really deserve your commission. It may be a competitive market, but focus on the good. Mortgage rates are still low right now, things are better than they were last year, and you are helping people find their next home.