With double-digit appreciation and rapid reduction in the supply of homes for sale, we have officially moved from a buyer’s market to a seller’s market in many areas. This paradigm requires home buyers to modify their strategy for purchasing a home. In the new real estate market, multiple offers and   stubborn sellers are commonplace. If you think it’s bad now, just wait a few more months when inventory levels are depleted even further.

A buyer’s new strategy should reflect changing market       conditions. Home buyers now have the opportunity to focus on the emotional benefits associated with purchasing a home. Price should not be the most important consideration. Consider the following examples:

A home buyer finds a house they like and offers fair market value of $400,000. This is a reasonable offer based on the fact that the home would appraise for this amount. The seller is    demanding $440,000. Should the buyer pay this amount? If this is the right house for the buyer, absolutely! Based on the seller’s market and appreciation of 12% or more this past year, it’s likely appreciation in the coming year will be the same or more. At an appraised value of $400,000, it’s likely the property will be worth $448,000 in a year. In other words, next year, the home will be worth $8,000 more than what the buyer paid this year. The expected appreciation has minimized  risk associated with overpaying. Besides, the buyer now has an additional 12 months of use and enjoyment of the property at no additional cost. The strategy of subordinating price considerations to the emotional benefits of purchasing a home should be extremely sound in the  present seller’s market.