Jeff Duncan Real Estate
Jeff Duncan
(360) 441-2121(360) 441-2121

3 Tips for Buying a Home in a Competitive Market

Buyers have been at a disadvantage for the past 24 – 30 months in the current high demand/low supply market. Many have learned the following information the hard way; by missing out on opportunities to compete for the home they wanted. These three tips can not only help you purchase a great home in this competitive housing market, but they’ll help you become a more savvy buyer.




Base your offer on the home’s value, not the list price. The recent sales in the neighborhood give you and your agent ammunition and information. If a home is priced at or below market value, you’re unlikely to get it for less. If it is priced above market value and has been on the market for a while, a lower offer accompanied by a market analysis may get you the home. This is where a good agent can be invaluable. There are sellers in the current market who are overpricing their homes to try to capitalize on the incline in prices we’ve seen over the past couple of years.  They may not realize that homes in the $500+ category are experiencing longer market times and price reductions in order to sell.  A good buyer’s agent will be able to use this information in your negotiations.



Do the math before getting squeamish about increasing your price.  Whether you’re crafting a competitive offer or are in the middle of negotiations on price with a seller, one of the best ways to come out on top in a hot market is to increase your offer price. It’s a necessary evil if you really want the house.  Let’s say you’re trying to decide on making an above list price offer in order to get the advantage, or responding to a counter offer from a seller that’s $10,000 above your offer price. Before you choke on the $10,000 difference, look at how this affects your monthly payment over the life of your loan.  At current interest rates, it amounts to about $60.00 a month, which you could fund by foregoing a meal out each month (depending on your tastes!), curbing your coffee habit a little, or budgeting more for groceries.



Understand how increasing mortgage rates affect your purchasing power.  You’ve heard the urgings to “buy now before the Fed increases rates”.  What does this mean?  Is it really that big a deal? Let’s look at a home purchase price of $400,000 with a 20% down payment ($80,000), at 4.0 % interest.  This translates to a loan amount of $320,000 and a principal & interest (P&I) payment of $1527.73 per month.  If the interest rate jumps by just 1 point to 5.0 %, that monthly payment with all other terms unchanged becomes $1717.83 per month, a difference of $190.10.  That’s a lot more than a few lattes!  If the ballpark $1530.00 monthly payment is your maximum budget for a home purchase, then your maximum purchase price becomes $355,000 with a down payment of $71,000 and a loan amount of $284,000.  That’s an 11% decrease in your purchasing power, based on that single percentage point increase in mortgage interest.  Now you can see why it’s much better to purchase now!

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