The internet news have been in a frenzy over the challenges home buyers will face in the real estate market this year with record low housing inventory. According to the National Association of Realtors, the number of "for sale" listings fell to the lowest point in December 2016 since 1999. While an average balanced market has 6 months of inventory, sales at this fast pace could be gone in about 3 months. For the first time home buyers including millennials, the news is even worse with entry-level homes becoming more and scarce on the market. The first time home buyer currently makes up less than a third of the market, when historically they have been at 40%.

This poses a problem for the home buyer who is facing tough competition in a hot market, and certain conditions will make a difference. The most favored buyers act fast and pose smaller risk to the seller. The buyers who are pre-approved for a mortgage, have more cash for a down payment, and no contingencies are at an advantage. However, besides these qualifications there are tactics a home buyer can use to be competitive. From leveraging the principle of supply and demand to exhibiting quick thinking and patience, the following are tips to buying a house in a seller's market.

First of all, a buyer should be prepared. The buyer should not only be pre-qualified, but also pre-approved with the lender verification of their income and assets. Also, a "proof of funds" is helpful to show that the down payment can be covered. Then, the buyer should be ready to hit the ground running.  When the purchase takes place during low inventory, a buyer should be prepared to give full price and perhaps a little more. The demand being high, the offer on the table should be the best and final offer. The buyer's finances should be in order, as paying more money for the house might not be approved for a mortgage. Due to the fact that the mortgage on the house usually does not exceed the appraisal value, the difference would have to be made up in cash. Another idea is to increase the amount of earnest money to go with the offer. For example, when a buyer pays more for the deposit on the house showing the seller serious motivation. As far as financial incentives, the buyer would stand out from the crowd making aggressive financial moves right off the bat.

Second, hiring a professional and experienced realtor will be crucial to landing a deal in a competitive market. Besides being able to do a market analysis of the neighborhood, a realtor will be familiar with the available inventory and the conditions of the market. A brilliant tip is to ask the realtor to tap into their pre-market inventory which becomes available through real estate connections and associates. Also, ask the agent to check "withdrawn" and "expired" listings on the MLS, perhaps overpriced at the time, they now may be a great buy. The realtor will urge you to move quick and become available during negotiations. The buyer should think of the house search, as a job search not something that is done when convenient, but a daily task that requires diligence and commitment. If a realtor is in talks with the seller, the seller may have questions about the offer and if the buyer is unreachable, the seller may choose another offer.

Another, great tip is to broaden the search outside of preconceived parameters. A good idea is to check the rental listings, perhaps the owner has not yet had to the time to list it for sale. Contacting the owner and inquiring about the listing could yield a potential deal. The buyer shouldn't shy away from overpriced listings. Six weeks into an overpriced listing the curb appeal fades, the house gets dirty, and the offers stop coming. While most sellers won't list their houses at a lower price after a period of inactivity they would sell it for less. Also, a buyer should check out houses that are "flawed". For example, a house in an up and coming neighborhood instead of the desired neighborhood. A home that needs renovation work or is further from the schools than necessary. While those may be deal breakers for some home buyers, they might get you a better deal if you are able to overlook these flaws and be comfortable.

Finally, a buyer can write a great offer letter to the seller. This works well appealing to the emotional side of the home seller, and many do view the sale of their home as "their pride and joy".  A buyer can write how much they love the house and why they want to buy it. It may set the buyer apart from the competition by giving it a personal angle. Above everything else, the sellers will feel that their home will be cared for by the new owner. 

The record low inventory rates of real estate in 2017 makes it a blazing hot seller's market as well as a challenge for home buyers on the search for a new home. The stiff competition means that the days of haggling over the price of a house are over. The inventory is tight and when 90% of sellers are looking to repurchase, the seller needs to know that the buyer is serious and committed to the purchase. Therefore, the buyer needs to be prepared to act quickly and be responsive. Furthermore, the buyer can become more competitive by having their finances in order, being aggressive with financial offers, and relying on an experienced real estate agent to be a guide. When these things are in place, there are great tricks of the trade that can be used to find listings that are hidden on the market. A buyer can be successful purchasing a house in a seller's market with low inventory, when they are committed and available to do extra work to get their real estate.