Trying to buy a house relies on there being houses to buy, which is why periods of low housing inventory are so frustrating. However, just because your searches aren’t turning up many properties doesn’t mean you should give it up for another few years.
Our buying strategies are designed for times of low housing inventory. Give them a go—their efficacy will amaze you.
What is Low Housing Inventory, and Why Does It Happen?
Low housing inventory describes a time when potential sellers aren’t putting their properties on the market. This might be due to several reasons:
- Low mortgage rates. When interest rates on mortgages are low, homeowners often take advantage of this and refinance their properties at a better rate. This leads to a reduction in sellers.
- Lack of housing construction projects. This is a huge problem in the United States. Failure to build enough houses to satisfy demand in an area leads to low housing inventory as real estate investors take or buy up existing properties.
- Economic uncertainty. Homeowners are less likely to make the big decision to sell in unstable economic times.
No matter the cause, low housing inventory means that buyers have less choice and may have to pay higher prices for homes that don’t suit their needs. However, there are ways to circumvent this problem, especially if you’re working with a good lender and real estate agent. Let’s talk strategy.
Best Strategies for Purchasing Properties in Low-Inventory Periods
Below are some of our top tips for finding and buying the house you want and deserve – without paying through the nose.
1. Get Pre-Approved With a Good Lender
Being pre-approved by a lender shows a seller that you have the resources to buy their property. Unless you have enough money to buy the property outright, pre-approval from a reputable lender is almost mandatory in periods of low housing inventory.
This is why choosing your lender is also so important. The seller and their agent will want to know that the lender is well-regarded and will help make the buying process as straightforward as possible. This significantly reduces the risk that the lender will pull out for unforeseen reasons, which is the last thing a seller wants.
Before you start looking at properties, work closely with your lender to find out how much you can be pre-approved for. Keep them involved in your search and buying process: good communication on all fronts maximizes your chances of landing your dream home.
2. Stay Vigilant: Taking House-Hunting More Literally
If you’re a fan of nature documentaries (or enjoy hunting yourself), you’ll be familiar with the perfect stillness and incredible patience of hunters before they pounce. You’ll know the lightning-fast moment when they pounce and get their quarry. Buying a property in a time of low housing inventory is a bit like this.
You may have to wait longer, but be ready to spring into action when you see a good property. However, you still need to check it out thoroughly before you purchase – it’s about starting the conversation instantly, not buying blind.
3. Search Off the Beaten Track
Just because properties aren’t listed as “for sale” doesn’t mean the seller won’t consider it. Look at rental properties and expired listings – in the latter case, the seller might be willing to negotiate for a lower price than it was listed at.
If you see a property that looks perfect but doesn’t appear to be for sale, there’s nothing wrong with making polite inquiries. The worst that can happen is a negative response from an irritable landlord, but you could potentially find an amazing house that nobody else has noticed.
4. Make a Strong Initial Offer
Be ready to put your money where your mouth is, and quickly. Low housing inventory means it’s a sellers’ market, and the seller knows this. Make your best offer as quickly as possible because they know they can afford to hold out for longer than you can.
Don’t go crazy – talk to your lender and ensure you’re pre-approved for any offer you make. Remember that your lender’s backing is key to the integrity of your offer.
5. Make Your Offer Personal
Let the seller know why you chose their property. This is especially important if you’re putting in an inquiry about a rental or expired listing – let them know why you bothered to ask. Personal interest means a lot to most sellers. It means you’re more likely to be responsive and committed to the deal.
6. Choose Your Agent Carefully
Find an estate agent who you trust has your best interests at heart and who provides imaginative suggestions rather than waiting for you to do all the work. Your estate agent should know the type of property you want as well as you do.
They should also work on good terms with your lender and all other parties. Support is always appreciated, but some agents can take their roles a little too seriously and come across as aggressive or inflexible.
7. Show Patience and Sympathy with Other Parties
Just as your estate agent and lender should be committed to getting a deal done in good faith and to suit all parties, so should you. Buying during a period of low housing inventory is stressful, but so is selling. Estate agents and lenders don’t like these periods, either – it’s not a good time for the housing market, and it makes everyone’s lives harder.
Be polite, cordial, and sympathetic with the seller. Show patience and good faith, and you’ll likely be rewarded.
Buying in a Time of Low Housing Inventory
Low housing inventory means that it’s time to get creative. Finding properties where others aren’t looking for them, working with the best people, and working with a lender who can pre-approve your offer are all essentials.
Contact the team at Associates Home Loan today to learn more about buying during low housing inventory and how you can be prepared to purchase your dream house with the best loan for your needs.