What are some tips for a first-time home buyer in a seller’s market?

You have to be ready to make an offer with NO contingencies.

This means you cannot just be preapproved for a loan but your loan must be “desk underwritten”. In other words the underwriter must completely review the entire loan package so you can make an offer without a loan contingency.

You also must have enough cash reserves so you can make-up any difference between the sales price and the appraised price. When prices are rising rapidly the appraisals will generally lag behind sales prices since they are based on properties that sold months ago. This could mean that you have to get a 90% loan rather than an 80% loan to conserve your cash.

Finally, you often have to waive all other contingencies like inspections to get your offer accepted. Hopefully, the seller has paid for at least a pest control, home and roof inspection from reputable companies. That way you can make an informed decision.

In May of 2021 in the San Francisco Bay Area people are regularly making offers between $150,000 to $250,000 or more over the asking with no contingencies and still not getting accepted offers. Right now I am commonly seeing 20–40 offers on homes. Right now I am commonly seeing 20–40 offers on homes so it’s an extremely competitive market.

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