Here are some tips for buying in a tight housing market for you.

 When inventory is low, prices go up and homes sell quickly - this is considered a tight housing market. Buying a home in this market can make an already complex process even more overwhelming.

Follow these tips to avoid unneeded stress!

Tip #1 - Identify Home Wants vs. Needs

There are many features to consider when buying a home. Wants, such as stainless appliances or hardwood floors, can be added later so don't get caught in bidding wars for homes with these features. Focus on homes that meet your needs and you may find more success. Such features include school district, neighbors, lot size, location and floor plan layout.

Tip #2 - Establish And Stick to a Budget

Buyers should get a preapproval as soon as possible to verify the amount of money they are qualified to borrow. From there you can take into account additional costs of ownership such as taxes, utilities and insurance, to determine a final budget that you can afford. Remember, in a tight market bidding wars can drive up prices, so be prepared to walk away if the asking price surpasses your budget.

Tip #3 - Bid Competitively with a Solid Earnest Money Deposit

While it is tempting to submit a low offer as a starting bid, buyers should put forward their highest offer from the very beginning or they are likely to lose out on the home. In addition, make sure your offer includes a solid earnest money deposit to show you are committed to the sale. (Earnest Money Deposit - the cash provided by the buyer, ranging from 1% up to 5% of the purchase price, which gets held in escrow until the sale closes.)

Tip #4 - Be Flexible

In multiple bidding situations it's not always the highest offer that is the most attractive to a seller. Find out if there are any items that are important to the seller that you can be flexible with, like the move-in date. Allowing a few extra days for the seller to move out can make your offer standout from the others.

Tip #5 - Hire A Professional

Finding your dream home in a tight market is a full-time-job, hire a professional! Realtors are the most trusted resource for real estate information and have unparalleled knowledge of their communities; they can give you the competitive advantage needed in a tight market. (Tight market can also be referred to as a Seller's market because of low inventory or number of homes available for sale)


Source: National Association of Realtors, CentralBank.net. Courtesy of Real Estate Infographics.