Finding a new home in a competitive market isn’t easy. It can make it a long, grueling process because plenty of other buyers are trying to do the same thing. Here are some of the clear signs that you are dealing with a competitive real estate market.
Bidding Wars are Normal
When a market is super competitive, bidding wars are expected on just about any property. You won’t put in an offer without other buyers trying to outbid you. This is a great time to make sure you put in a good offer, if you really want the property. You may even consider using an escalation clause to ensure you get the home.
An escalation clause allows you to outbid any new bids by a certain amount to ensure you have the highest bid. This allows you to increase the dollar amount of your offer as other bits come in. You only want to really do this if it’s a competitive market.
Cash Speaks Volumes
In a competitive market, cash is the king and anybody with cash wins, for the most part. If you make the same offer as somebody with a loan, but you have cash, you will ultimately win the home. Sometimes, you can even win the home without having as much as another offer, if it’s cash.
Homes are Selling Above List Price
When the real estate market is competitive, homes will end up going for more than the list price. Buyers will offer more than normal to keep from losing the homes and bidding wars will drive the price up, as well.
As a buyer, you don’t want a party. Instead, you want to be a loner and the only offer on the property. When multiple bids come in quickly, it’s not just a competitive market, but a cutthroat market. This will also cause open houses to be packed and you may have to make an offer higher than you want.
Neighborhoods Follow Suit
Sometimes, the city itself is a competitive market, but other times it’s a specific neighborhood in the city. When this happens, you may get neighborhoods nearby following suit. When a neighborhood becomes a hot spot, the next neighborhood over might follow suit.
Not Much to Choose From
When you get online and start searching, but you seem to have very few options, it’s not because homes are not for sale. It’s often because homes are flying off the shelves. This is a major sign of a competitive market and the tighter it gets, the more competitive it will become.
Plenty of Extras
In a competitive real estate market, another thing that will happen is buyers will start to offer extras to help persuade the seller to accept their bit. This is a common thing when multiple offers are present. buyers may offer to close faster or even write a letter to explain why they want to buy the property.
These are all signs of a very competitive real estate market. Sometimes, it’s not an entire city or suburb that’s hot, but a single neighborhood or a few neighborhoods. Keep this in mind as you search for the perfect home for your needs.