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If you have been looking to purchase a home in 2021, you have probably been told that you are in a “hot housing market” and to be ready for a long wait or fierce competition. What exactly is a hot housing market? And how can you, the potential buyer, make it work to your advantage?
Housing Market Trends
A hot housing market generally refers to a housing market that has more buyers than sellers. This is often great news for sellers, as potential buyers can be lining up around the block (sometimes literally) to look at their home listed for sale.
A hot housing market can be more frustrating for potential buyers, since there is so much more competition. With fewer homes available for sale, buyers need to be ready to act quickly to get approved and under contract.
Buying in a Hot Housing Market
Does a hot housing market mean that buyers are just out of luck? Not always.
Serious buyers intent on purchasing a home come ready to make an offer. When you tour a home for sale, whether with your real estate agent, at an open house, or on your own, chances are there are other buyers there who are just as motivated as you. You should have your criteria already established—number of bedrooms/bathrooms, amenities, neighborhood, budget—so that once you find a house that fits, you can put in an offer that day.
Having a pre-approval letter from your lender can also help to set your offer apart from others that the seller may receive. This shows that you have already taken the preliminary steps to secure financing and that your offer is realistic with your budget.
Finally, be prepared to consider forgoing some contingencies that you would normally work into a purchase offer. In hot housing markets, buyers who are willing to skip the home inspection can be more attractive to sellers because it eliminates a reason that the deal may fall through and saves time. If this isn’t a step you are willing to skip, you can still include it. Even if it takes a bit longer to find your dream home, you will be happy knowing that it is exactly what you always wanted.