Like any other industry, the Single Family Real Estate market is heavily influenced by supply and demand trends. Currently, many of the top area codes across the country are experiencing a seller’s market – where the demand for investment properties for sale exceed the actual housing inventory, putting investors at a disadvantage when buying new properties.
This type of market often leads to bidding wars, low availability in popular areas, and hasty investment decisions. With all that in mind, many investors might wonder if it really makes sense to purchase properties during a seller’s market? We say yes! Even with all of these factors working against them, investors can still find lucrative deals.
Here are some ways you can mitigate the challenges that come with a seller’s market when buying properties:
- Re-evaluate your buy box – A thoughtful buy box should prompt investors to decide what property and market characteristics are important to their investment strategy, and focuses their attention on deals that meet the established criteria. During a tighter market, it may be beneficial for you to re-evaluate your current buy box and see if there are any areas where you can expand your criteria. This ideally will give you a greater number of property options that are still strong deals.
- Add more channels to your sourcing strategy – Similarly, now is the right time to expand your sourcing channels. If you’re only using one or two methods, you’re missing out on a plethora of attractive investments. From foreclosure auctions to wholesalers, there are a variety of channels you can start to incorporate into your strategy to help you find more deals and act faster. Backflip’s Returns Analyzer can help you determine if a deal is good or bad quickly, so you can move through your lead list faster than the competition.
- Get pre-approved for financing – To enhance your chances of snagging an investment deal, get pre-approved for loans. Being able to quickly provide proof of funding to the seller will bode well when you present your offer, giving you a competitive edge when there are multiple offers on the same property. With Backflip Capital, you can get pre-approved in under 48 hours.
- Keep your offer simple, but strong – You want to avoid a back and forth negotiation during a seller’s market. Sellers likely already have several offers on the table, so you want to make yours stand out right away. Use our Analyzer tool to understand comps in the area, and what type of offer you can submit in order to still make strong returns. You’ll be able to see if you’re getting a good deal out of this property (or not), in just a few minutes.
With these tips, you should be able to purchase profitable properties for your portfolio, even in a seller’s market. The key to locking down a lucrative deal is to remember that time is of the essence. To stay ahead of the curve, leverage Backflip’s suite of tools to ensure you’re making the right investment decisions.