SALEM, Ore. (CNN/Money) – With interest rates still low and inventory of houses for sale extremely tight, buying property in some markets is practically a competitive sport.
"I tell people that this market is not for sissies," said Diane Saatchi, a vice president in the East Hampton, N.Y. office of the Corcoran Group.
For now, there's no need to wear shoulder pads and helmet to the open house, but you do want to be ready to hustle if you find the right house for the right price.
"First and foremost you want to get pre-approved by a lender," said Harley Rouda Jr., CEO of Real Living, one of the largest real estate firms in the Midwest, explaining that in markets where sellers get multiple bids, it's critical to line up your financing before you make an offer.
Bids that aren't backed by a lender are the first to go, unless of course the buyer is paying cash.
Speaking of cash, you may want to try to bulk up your down payment if that is an option.
"In competitive markets where two offers are presented to the seller, the one with 20 percent down looks better than one with a smaller down payment," said Eric Cunliffe, senior vice president for RealEstate.com. Assuming that buyers have been pre-approved, the size of the down payment shouldn't matter to the seller, he said. "But sellers still tend to drift toward someone with a larger down payment."
With so many online tools for finding property for sale, you might be tempted to bypass the agent and do all the leg work on your own, but that might be a mistake. (See "Who's working for you.")
First of all, a good buyer's agent will be able to give you a heads up on property as soon as it comes on the market or point you in the direction of neighborhoods or towns where prices are still in your league. The agent will also have the most up-to-date sales stats for the area, making it easier for you to spot a good value and place a viable bid. "You need somebody who's connected to the market, who can say 'You want this house,'" said Saatchi.
"I'm not saying that people shouldn't take their time looking if they're just starting the process and are not sure what they want," she added.
But, when you're ready to get serious about buying you have to move quickly and start the negotiations with a solid offer. "If you make a low-ball offer you won't even get a counter offer in a hot market," said Cunliffe.
In some markets, buyers are even composing "love letters" to include with their offer letters, telling sellers who they are and why they are such a great match for the house. While some agents recommend such a tactic, others warn against getting too cozy with the sellers. (See "Dear Seller, I knew it was love when.")
Game plan for sellers
The good news for sellers in hot real estate markets is many of the conventional rules for pricing real estate have gone out the window.
"A few years ago it was suicide to overprice a house and then reduce it," said Saatchi. "Now we're telling sellers to pick their price... there is no harm in reaching because the market is moving so quickly."
Although every market is different, agents know they need to lower the price if buyers aren't looking or looking but not making offers. "In our market we're telling people that if there are no offers after eight people see the house it's not priced right," she said. On the flip side, sellers in thriving markets can price the house under market value and rely on buyers to bid up the price.
Of course, these strategies don't apply if you're selling in a less exuberant market. "In a slow market you want to price to sell," said Cunliffe, explaining that this is particularly true now that the majority of buyers start their house hunt online, usually searching by a range of prices. "If you price too high... you'll knock yourself out of the running."