Smarter House Hunting Starts Here

Reading Market Signals

When it comes to buying a house, every real estate market is different. A winning strategy in one market can be a losing one in another. Coming heading into a seller's market, you could miss out on a great deal, and in a buyer's market you could be too late to take advantage of something you didn't even know was there.

Well-known signs that you can use to figure out the market are the days it takes for a property to sell. Properties that are snapped up within ten days are likely to see multiple offers, those that take over thirty days to sell give you breathing space to negotiate, and those that languish over sixty days are often a motivated seller’s desperate attempt to get rid of a property.

Price drops are also an indicator of flexibility. A price reduction within two weeks can mean the sellers have overpriced, and a repeated reduction could mean that the seller is running out of ideas, or there is something wrong that you'll need to investigate.

Showing activity is also something you should look for. Your agent can tell you how many viewings a property has had. If you're finding lots of traffic but no offers you may be able to use this to your advantage by investigating further.

Structuring Your Offer

Price is only one part of the equation, sometimes it’s the terms you add to the offer that matter more to sellers.

Closing Timeline Preferences: Sellers who have already found their next home tend to want a quick closing, whereas those who haven’t may need more time. If you can meet their timeline, your offer can be quite strong, even if your price isn’t the highest.

Earnest Money: Shows your commitment to the property. Buyers usually contribute 1–3% of the purchase price. A larger deposit can really make you stand out in a competitive market.

Escalation Clauses: These kick in if there are multiple bidders and raise your offer by a set amount up to a pre-defined limit, but may be disfavored by some sellers and real estate agents.

Common Contingencies Explained

You're given a degree of freedom with the contingencies that are part of the deal when signing a real estate contract. Each contingency gives you a way out, but at the same time, each weakens your offer and potentially makes it less attractive to the seller.

Inspection Contingency: Allows for a professional evaluation of the property, and based on the findings, you can renegotiate or withdraw. It takes about 7–10 days, and in more competitive markets, some buyers waive it, which is a high-risk gamble on expensive repairs.

Appraisal Contingency: The appraisal contingency protects you if the property's value falls short of your offer. If you don’t get this, you'll either lose the deposit or have to cover the difference. Only buyers with extra funds tend to skip this, so always discuss the risks with your lender or agent.

Financing Contingency: This gives you a 30–45 day period to secure a loan. Sellers are in the dark about the mortgage pre-approval, and you'd want to be on top of your financing.

Home Sale Contingency: Lets you buy only after you've sold your house, a rare commodity in seller’s markets. The use of “kick-out clauses” makes it even difficult for sellers, since they can continue showing the home and possibly accept a more attractive offer.

When Speed Matters

The most aggressive offer can win out over the more cautious one, and sellers often choose the simplest deal with the fewest strings attached when you're in a competitive market. The larger the deposit and the more flexible the terms, the higher your chances of getting a yes.

Well-known homes that have been on the market for a bit don't stay that way very long. They are usually a safe bet, and if a house is being pushed out of the market fast, it's a great idea to make a quick move. Unlisted and pre-market homes, which don’t go through the public market, often take lower offers if it’s a guaranteed sale. The sellers want an easy process more than a high price.

Negotiation After Inspection

Negotiation after the inspection is one last chance to make your move. What you ask for will depend on the state of the house, how serious the problems are, and the market. If you find huge problems or things that are hazardous, you can ask for repairs, and sellers will usually sort out major issues like boilers, roofs and electrical systems to avoid a collapse in the sale.

You could ask for credits or a smaller price if you're planning to sort out the repairs yourself. This way you get to pick the workers and make sure the job is done to your satisfaction. If the sellers won’t sort out any major problems, it’s time to re-evaluate the deal. Massive issues such as cracks in the foundation, mold and major system failures are clear-cut reasons to invoke your inspection clause and get out of the deal.