How to Buy and Sell in a Market of Low Inventory

How to Buy and Sell in a

Market of Low Inventory

It's getting harder to find starter homes for sale.

But if you know some tricks of the trade, it’s still possible to find — and buy — the perfect one for you.

Once you’ve taken all the steps to prepare for buying a home, you’re ready to begin the house hunt. But what happens when you’re out scouting neighborhoods — in person and online — and you realize there’s not much to look at? Finding few options, or maybe even nothing for sale in your price range is increasingly common for many homebuyers.

Offer a higher price, within reason.

It’s supply and demand 101: Prices rise when inventory is low and demand is high. Offering a higher price can be tricky when you’re buying a home. You’ll need to make sure you can afford — and get — a bigger mortgage. But you also need to be able to make up the difference in cash if the house appraises below your offer. Most lenders will not approve a mortgage for more than the appraised value. You could also offer more money upfront. This shows the seller you’re serious, and it may make your offer stand out.

Mortgage recasting.

Your Madison agent can introduce you to mortgage experts who can explain an option called "recasting." A mortgage recast is when you make a lump-sum payment toward the principal balance of your loan. Most commonly (if you qualify), homeowners recast a mortgage once you've purchased a new home but haven’t sold your old one. Once the previous property has been sold, then the homeowner can use the proceeds of the sale toward their new mortgage.

Rent the home back to the sellers.

Do you find it tough to time your cooking so that all the food is ready around the same time? Consider how hard it can be for a seller to sync the sale of their home with their new home’s move-in date. In a competitive market, sellers could end up homeless if their home sells before they have a new home to move to. If you can postpone your own move, offer to rent the house back to the sellers for a short time. This might give the sellers the flexibility they need — and a competitive edge for you.

Act quickly, but practice patience.

Landing a home in a competitive market can mean a lot of “hurry up and wait.” Some agents advise their clients to “be ready on a moment’s notice to make an offer on hot new listings.” But be prepared. Although you need to be ready to pounce on a home as soon as it becomes available, the deal might not be right for you. Or your offer may be turned down.

Be flexible on closing dates.

Besides being fast on the offer, you might need to close quickly too. If your seller needs a quick closing because of a job relocation or divorce, your offer might have more weight if you can sprint to the closing table. But how can you speed up this process? Shorten your inspection time frame. Ten days is long enough for a home inspection if you’ve got an inspector ready. Also, if you’re preapproved, you may be able to close as quickly as an all-cash buyer. Your mortgage lender will have everything in hand to start underwriting your mortgage.

Approach landlords.

Here’s a think-outside-the-box idea: Approach landlords who are advertising a home for rent. Ask if they’d be interested in selling. You might be turned down, but you never know. Not all landlords want to be in the rental business. Some reluctant landlords who can’t find a tenant would be happy to entertain your offer.

Work with a Madison agent and take advantage of Madison Vault, a proprietary buyer and seller matching platform, to find off-market homes.

This platform organizes and optimizes properties not yet publicly listed, active buyers, and other selected pieces of critical time-sensitive information to create a true advantage

in Denver’s highly competitive real estate industry. Madison Vault is a private, internal community collaboration platform providing the opportunity for sellers to get a sale before they go public to the MLS. This technology was created to fill key communication and technology gaps that constrain the real estate industry.