Buying a home in a competitive market can feel like a test of how quickly you can make decisions and how far you are willing to stretch your budget.
A desirable property hits the market. Buyers crowd the open house. Multiple offers arrive within days, and suddenly the asking price feels more like the starting point of an auction.
But moving faster and offering more are not always the best ways to compete.
On a recent episode of the Real Estate Update Podcast, host Paul Centopani sat down with Matt Lind, a licensed real estate broker at Compass, to discuss what buyers are facing in competitive markets. Lind has worked in real estate since 2018 and offered a boots-on-the-ground perspective from Chicago, where limited inventory has created intense competition for many properties.
Their conversation covered why some markets remain so unbalanced, how buyers should approach bidding wars, which concessions may provide the most value, and why knowing your financial limits before shopping is more important than ever.
Here are some of the biggest takeaways for buyers trying to purchase a home without allowing the competition to take control.
Limited Inventory Is Keeping Some Markets Competitive
Real estate conditions vary considerably from one city, neighborhood, and price range to another.
“Real estate is always so hyperlocal that each locality is going to have its own story,” Lind said.
When the episode was recorded during the spring, Lind described the Chicago market as particularly active. Some buyers who had delayed moving over the past few years were returning, while life changes continued creating demand even among people who might have preferred to wait.
That local assessment has remained consistent with the data. According to the latest figures from Illinois Realtors, the number of homes for sale in Chicago was down 26.3% from a year earlier in July 2026, while the median sale price rose 13.3% to $425,000.
“It’s very unbalanced in the seller’s favor right now. And that’s supply. That’s lack of supply,” Lind said.
Chicago is only one example of a broader divide. Realtor.com’s July 2026 Monthly Housing Trends found that active listings remained 11.6% below typical 2017–2019 levels nationally. But inventory was 47.0% below those norms in the Northeast and 34.4% below in the Midwest, while the South and West were 4.0% and 9.9% above them. The number of available homes, and consequently the amount of competition, can look completely different from one region or community to another.
A strong seller’s market may sound ideal for homeowners, but selling is only half the equation. Someone who needs to remain in the area may immediately become a buyer facing the same inventory shortage, which can discourage owners from listing and further restrict the number of homes available.
Higher mortgage rates can intensify that problem because selling may require giving up a much lower rate on the current loan. Research by the Federal Reserve estimated that the 2022 mortgage-rate lock-in shock reduced time on market by 29% and increased home prices by 8%. The effects were concentrated in markets that were already unusually tight, demonstrating how homeowners staying put can reinforce an existing inventory shortage.
Know What You Need From a Negotiation
Buyers often focus on negotiating a lower purchase price. But a price reduction is not always the concession that provides the greatest benefit. The best strategy depends on the buyer’s actual financial constraint.
- Purchase price reduction: The seller agrees to accept less for the property. This may be necessary if the buyer cannot qualify for or otherwise afford the home at its current price.
- Seller-paid closing costs: The seller contributes toward eligible expenses the buyer would otherwise pay at closing. This can be more valuable to a buyer who can manage the monthly payment but is short on upfront cash.
- Interest-rate savings: Depending on the lender and loan program, buyers may be able to lower their rate by paying discount points, applying eligible seller concessions toward financing costs, or qualifying for special lender pricing.
Unlike a purchase-price reduction or seller-paid closing costs, interest-rate savings are primarily a financing question. Lind noted that some borrowers may qualify for discounted pricing through military eligibility or an existing banking relationship, but available options vary by lender and loan program.
“You kind of need to know how much you need to bring to the table,” Lind said.
The Consumer Financial Protection Bureau says closing costs typically equal 2% to 5% of the purchase price, separate from the down payment. On a $400,000 home, that would mean approximately $8,000 to $20,000 in additional upfront costs. This helps explain why a buyer with adequate income but limited savings could benefit more from eligible seller-paid closing costs than from a relatively small price reduction.
The lender matters as well. According to the CFPB, homebuyers may be able to save $600 to $1,200 per year by obtaining and comparing mortgage offers from multiple lenders.
In a multiple-offer market, however, a seller may prefer a proposal that does not ask for help with the buyer’s costs. Buyers should identify which concessions matter most before they begin shopping rather than waiting until they are emotionally invested in a property.
Price is also only one part of an offer. Sellers may care about:
- Closing timeline: Whether the buyer can accommodate the seller’s preferred closing or move-out date.
- Financing and earnest money: How the purchase will be funded, the amount of earnest money offered, and how prepared the buyer appears to complete the transaction.
- Contingencies: The inspection, appraisal, and financing protections included in the contract.
A buyer’s agent may be able to learn which terms matter most and structure the offer accordingly. The goal is to be flexible where flexibility is affordable and safe, not to surrender essential protections or accept a payment that no longer fits the budget.
Know the True Cost of Owning Before You Shop
A mortgage preapproval can help determine how much a lender may be willing to finance. It does not necessarily tell buyers how much they should spend.
The responsibilities of homeownership extend beyond principal and interest. Depending on the property, owners may also need to account for:
- Property-related charges: Property taxes, homeowners insurance, mortgage insurance, and homeowners association dues.
- Ongoing expenses: Utilities and routine maintenance.
- Financial surprises: Unexpected repairs or replacement of appliances and major systems.
A buyer who uses every available dollar to cover the down payment and closing costs could be left without enough savings when an appliance stops working or the property needs an urgent repair.
“Understand what you can afford,” Lind advised. “Understand what the cost of really owning is.”
Buyers should consider whether the payment fits into their broader budget and whether they will still be able to maintain an emergency fund, save for other goals, and handle normal home repairs. Starting that discussion before touring homes can also prevent them from becoming emotionally attached to properties outside their price range.
Shopping During a Slower Season May Reduce the Pressure
Spring and early summer are traditionally active times for real estate in many markets. Families may want to move while children are out of school, and sellers may prefer listing when landscaping and exterior features show well. The result is a cycle in which more sellers list during warmer months, attracting more buyers and creating greater competition.
Lind said the Chicago market tends to follow something resembling the academic calendar. “September, October is really when things start to get quieter,” he said.
The seasonal difference can be substantial nationally. In a 2025 analysis based on historical patterns, Realtor.com found that the most favorable fall buying week typically offered 14.7% more active listings than an average week. Buyer competition was 30.6% lower than at its annual peak, and homes remained available for 13 additional days.
There is no guarantee that waiting until fall or winter will produce a lower price, and the precise timing varies by market. Inventory may also decline as fewer owners list during slower seasons. But buyers with flexibility may encounter fewer competing offers and feel less pressure to make immediate decisions.
Not everyone has the luxury of waiting. A job change, expiring lease, growing family, or other life event may require someone to purchase sooner. Buyers with a longer timeline, however, do not necessarily need to enter the market during its busiest period simply because that is when the greatest number of homes are listed.
Set Your Limit Before the Bidding Starts
Multiple-offer situations can quickly become emotional. After spending weeks or months searching, buyers may feel that losing a particular home means starting over. A relatively small increase above the original offer can seem reasonable, followed by another increase and then another.
That is why Lind recommends establishing a limit before submitting an offer.
“Go into it with some type of your own disciplined, reasoned highest number,” he said.
That number should reflect the buyer’s finances, the property’s value, and how strongly the home meets their needs. It should not be determined solely by how much another bidder may be willing to pay. Buyers do not necessarily have to begin with their maximum, but they should know where they will stop if the seller requests each bidder’s highest and best offer.
“The unfortunate truth of it is, in a market like this, a lot of times the highest bidder is going to win,” Lind said.
Current national figures put that competition into perspective. The National Association of REALTORS reported that 19% of homes sold above their listing price in July 2026 and listings received an average of two offers. All-cash buyers accounted for 26% of transactions. Intense bidding is not universal, but buyers in competitive situations may still face multiple offers and financially stronger competitors.
Winning the initial bidding war also does not guarantee the transaction will close. A buyer may experience remorse, financing could fall through, or the appraisal and inspection may create problems.
NAR also noted in its July 2026 Confidence Survery that 6% of purchase contracts were terminated and 12% experienced delayed settlements during the preceding three months. Appraisal issues alone delayed 6% of contracts.
Lind recalled working with a buyer who lost a condo to someone paying cash. When that transaction fell apart, his client received another opportunity and ultimately purchased the property. If the first contract collapses, the seller may return to one of the other bidders. Buyers who remain interested can let their agent know they would welcome another chance.
Even when that does not happen, losing to a bidder in a stronger financial position does not mean the buyer made a mistake. The competing buyer may have more cash, a greater personal need for that location, or simply a higher willingness to pay.
“You’ve got to have that hard stop and don’t let yourself run away with the price,” Lind said.
Expand Your Search Before Expanding Your Budget
Buyers who repeatedly lose homes may need to adjust their strategy. One option is to begin searching below their maximum price, creating room to increase an offer if the property receives multiple bids.
However, buyers should not assume every home will sell far above its listing price. Asking prices can reflect different seller strategies, and the amount of competition may vary significantly from one property to another.
Another option is to explore neighborhoods adjacent to the buyer’s preferred area, provided doing so does not sacrifice an essential requirement such as a specific school district, commute, or proximity to family.
A nearby neighborhood may offer similar housing, amenities, or access at a lower price. Buyers may also find less competition by considering a smaller property, a different architectural style, or a home that needs manageable cosmetic improvements.
The important distinction is between a preference and a true requirement. Buyers may discover that they have several alternatives once they identify which features they cannot give up and which ones they are willing to reconsider.
Experience Matters More When Competition Is Intense
Lind’s top advice for first-time buyers was to work with a real estate professional who understands the local market and fits their needs.
It was a self-aware recommendation, as Centopani joked that asking an agent about the value of representation was like asking a baker why someone should buy his bread. Still, professional experience can become more valuable when competition increases.
An experienced agent can help buyers evaluate comparable sales, communicate with the listing agent, structure contract terms, and recognize when a transaction carries unnecessary risk. The agent may also help demonstrate that the buyer is prepared and capable of reaching closing.
That does not mean an agent can guarantee an accepted offer. Nor does it mean buyers should waive protections or exceed their budget simply because an agent recommends it. The relationship needs to be a good fit, and buyers should perform their own due diligence when selecting someone to represent them.
The Bottom Line
Buying in a competitive market requires preparation, patience, and discipline.
Before touring homes, buyers should speak with a mortgage professional, compare lenders, determine the cash they will need, estimate the full cost of ownership, and establish a comfortable price range. They should also decide which features are true necessities and which ones can be adjusted if the search becomes difficult.
Once a bidding war begins, the buyer should have a reasoned maximum offer and be prepared to walk away when the price or terms exceed it. Flexibility on timing and other contract details may strengthen an offer, but it should not come at the expense of financial stability or essential buyer protections.
The market may favor sellers in some communities, but buyers still control how much they offer, which risks they accept, and when they step away.
Preparation cannot eliminate competition. It can, however, prevent the competition from making the decision for you.
