5 tips for buying a home in a competitive market
The supply of homes for sale continues to be tight in many Chicago neighborhoods. For buyers, that means increased competition, and in some cases, bidding wars.
If you’re thinking about buying a home in an area where properties are selling quickly, here are five things to consider:
Get pre-approved for a mortgage
A mortgage pre-approval (or proof of funds if you’re a cash buyer) is a necessity in today’s competitive marketplace. This not only lets you know how much house you can afford, but also shows sellers that you’re a qualified buyer. Having this at the ready will allow you to submit an offer quickly, if necessary to move swiftly.
Be ready to make decisions quickly
With inventory levels low in the city, there’s a strong possibility that someone else might be interested in the home you love. You’ve planned and prepared, and now it’s time to act. Be swift and decisive when making an offer or negotiating. Your broker should be able to advise you on the best strategy for each situation.
Start with your best offer
If you know you’re going into a multiple offer situation, it’s always a good idea to come in with your strongest offer as you may not have a second chance. Depending on the condition of the home, your finances and/or the state of your local market, it might make sense to waive certain contingencies, such as a home inspection or mortgage financing. Discuss this strategy with your broker at the outset to make sure you are comfortable with it.
Write a cover letter to accompany your offer
When you feel you’ve found the perfect home, you may want to write a letter to the seller. Make a case for why you want to buy their home and why you are the strongest/best buyer for the property.
Increase your earnest money if possible
Earnest money is a deposit, given by the buyer to the seller, which secures the contract until the closing. Increasing your earnest money doesn’t add to the cost of your purchase, but shows the seller you are serious about closing and will not back out of the transaction.
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